SECTION 5.9920. Immunity from Liability and Indemnification

(a) There is no liability on the part of, and no cause of action against insurers, the inspector, the Association, the Governing Committee, their agents or employees, the Association's administrator, the Commissioner or the Commissioner's authorized representatives, with respect to any inspections required to be undertaken by this subchapter; for any acts or omissions in connection with any required inspections; or for any statements made in any report or communication concerning the insurability of the property, in any findings required by the provisions of this subchapters or at any hearings conducted in connection with any required inspections.

(b) All liabilities under the policy to the policyholder, insureds and claimants are those of the Association. A servicing entity contracted by the Association or the Association's administrator to service the policy, even if a licensed insurer, has no liability under the policy to the policyholder, insureds or claimants. The Association's administrator has no liability under the policy to the policyholder, insureds or claimants.

(c) Each member of any Association committee, each Association officer, employee, member insurer, and member of the Governing Committee shall be indemnified by the Association against liability incurred in connection with the affairs of the Association. The Association shall indemnify each former, present, and future insurer, committee member, officer, and employee of the Association against, and each such insurer, committee member, officer, and employee shall be entitled without further act on his/her part of indemnity from the Association for, all costs and expenses (including the amount of judgments and the amount of reasonable settlements made with a view to the curtailment of costs of litigation, other than amounts paid to the Association itself) reasonably incurred by him/her in connection with or arising out of any action, suit, or proceeding in which he/she may be involved by reason of his/her being or having been an insurer, committee member, officer, or employee of the Association or of any other Association or company which he/she serves as a director, member, officer, or employee at the request of the Association, whether or not he/she continues to be such director, member, officer, or employee at the time of incurring such costs or expenses.

(d) However, such indemnity shall not include any costs or expenses incurred by any such insurer, committee member, officer, or employee in respect of matters as to which he/she shall be finally adjudged in any such action, suit, or proceeding to be liable for willful misconduct in the performance of his/her duty as such insurer, committee member, officer, or employee, or in respect of any matter in which any settlement is effected in any amount in excess of the amount of expenses which might reasonably have been incurred by such insurer, committee member, officer, or employee had such litigation been conducted to a final conclusion; provided, further, that in no event shall anything herein contained be so construed as to protect, or to authorize the Association to indemnify such insurer, committee member, officer, or employee against any liability to the Association or to its members to which he/she would otherwise be subject by reason of his/her willful misfeasance or malfeasance, bad faith, dishonesty, gross negligence, or reckless disregard of the duties or responsibilities involved in the conduct of his/her office or employment as such insurer, committee member, officer, or employee. The foregoing right of indemnification shall inure to the benefit of the heirs, executors, or administrators of each such insurer, committee member, officer, or employee and shall be in addition to all other rights to which such insurer, committee member, officer, or employee may be entitled as a matter of law.

Source Note: The provisions of this §5.9920 adopted to be effective May 28, 2003, 28 TexReg 4153