A Grand Prairie resident makes a claim to his insurance company for benefits. This could be a resident of Arlington, Dallas, Fort Worth, Weatherford, or any other city in Texas.
A question often comes up that goes like this, “How long does the insurance company have before they have to pay me?” The answer is “It depends.” Sounds lawyerly, right. Well it does depend. It depends on a number of factors, including the type of claim, the circumstances surrounding the claim, the type of insurance and the type of insurance company. However, guidelines to go by, are laid out in the Texas Insurance Code, Section 542.051 thru 542.061.
This area of the Texas Insurance Code is know as the “Prompt Payment of Claims statute”. It imposes certain deadlines for an insurance company to acknowledge, investigate, and accept or reject a claim. In situations where the insurance company violates the statute, they are punished by being liable for attorney’s fees and an additional 18% per annum penalty on the amount of the claim. These penalties are set out in Section 542.060.
The 18% penalty described above along with responsibility for attorney’s fees is substantial in and of itself but the next section, Section 542.061, says that other remedies are also available and that these other penalties are in addition to the penalty and attorney’s fees. These penalties are found in the section of the Business & Commerce Code, dealing with violations of the Texas Deceptive Trade Practices Act and in the Texas Insurance Code, for violations by the insurance company related to unfair methods of competition and unfair or deceptive acts or practices found in Section 541.051 thru 541.061.
The Prompt Payment of Claims statute sets out the steps an insurance company must follow when presented with a claim by one of its policy holders. To recover a penalty under this statute, the insured person must establish that: (1) the insured had a claim under an insurance policy; (2) the insurance company is liable for the claim; and (3) the insurance company has failed to comply with a requirment of the Prompt Payment of Claims Act. This has been spelled out in the Texas Supreme Court case, Allstate Insurance Company v. Rhonda Bonner, decided in 2001.
If someone feels they are being violated by the insurance company as it relates to having their claim handled promptly, they should do two things. First, get in touch with an experienced Insurance Law Attorney. Do not be concerned with costs at this point. Most attorneys will talk to you at an initial conseltation at no charge and then, if further action is needed, the insurance company is going to have to pay for the attorney’s fees, if they are at fault. And second, contact the Texas Department of Insurance and file a complaint. Most companies consider these very serious. They do not want to be investigated by the Texas Department of Insurance. Plus, this helps set up some relevant issues for a lawsuit if the matter is not resolved properly.
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