Someone in Grand Prairie, Arlington, Fort Worth, Dalworthington Gardens, Mansfield, Crowley, Rendon, or anywhere else in Tarrant County or Texas may wonder how long an insurance company has to pay a claim. The answer is, it depends.
In 2001, the Texas Supreme Court issued an opinion in the case, Allstate Insurance Company v. Rhonda Bonner. This case dealt with the time frame in which an insurance company must respond to a claim benefit request and the punishment for the insurance company when the time frame is violated.
The Texas Insurance Code has a chapter that deals with the payment of claims and is known as the “Prompt Payment of Claims” statutes. They are sections 542.051 thru 542.061.
Here is some information on the case.
Rhonda Bonner was injured under an Allstate personal automobile policy when she was injured in an accident caused by an uninsured motorist in October 1997. Bonner submitted notice for personal injury protection(PIP) benefits along with a bill for $1,802. Allstate acknowledged and paid the claim. Bonner then submitted a claim for uninsured motorist (UM) benefits under the same policy on December 11, 1997. Allstate received the demand letter on December 15, 1997, but did not acknowledge receipt of the letter until January 16, 1998. Section 542.055 says an insurer must acknowledge receipt of a claim, “Not later than the 15th day … after the date an insurer receives notice of a claim, ….”
Allstate eventually denied Bonner’s UM claim. Bonner sued Allstate to recover the UM benefits. Bonner alleged injuries and alleged Allstate violated the Prompt Payment of Claims statutes. Bonner sought recovery of her damages, attorney’s fees, and costs.
At trial, the jury compensated Bonner only $1,000 for her medical care and nothing for her physical pain and suffering and impairment claims and awarding her $7,500 for attorney’s fees. Because Bonner’s policy contained a nonduplication-of-benefits provision, and because the PIP payment exceeded the $1,000 UM damage award, the trial court rendered judgment that Bonner take nothing. The trial court refused to award Bonner attorney’s fees and taxed cost of court against her.
In analyzing this case the court reviewed the statute. Section 542.060 is titled, “Liability for Violation of Subchapter.” Part (a) states, “If an insurer that is liable for a claim under an insurance policy is not in compliance with this subchapter, … the insurer is liable to pay the holder of the policy, … in addition to the amount of the claim, … reasonable attorney’s fees.” In reviewing this statute and reviewing other cases dealing with this subject, the court said that since Allstate was not liable under the policy in that they had already paid enough per the jury verdict, there was no penalty to be awarded.
In conclusion, the court stated, “Although Allstate failed to acknowledge Bonner’s claim within fifteen days, Bonner has not presented a claim under her insurance policy for which Allstate is liable. As a consequence, Bonner cannot recover attorney’s fees under Insurance Code (Section 542.060).”
A reading of the Prompt Payment of Claims statutes has to be very careful. Violations turn on, (1) the type of insurance company, (2) the type of claim, (3) the liability under the claim, (4) the information required to investigate the claim, and other conditions that have to be looked at carefully to be able to decide if an actual violation has occurred. An experienced Insurance Law Attorney is needed to look at the facts of each case and evaluate those facts against the backdrop of these statutes in order to determine if there has been a violation.
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