All insurance lawyers understand that there are time limits within which an insurance company must accept and pay the claim or else deny the claim. And it is also understood that the insured making the claim has an absolute duty to cooperate with the claims investigation. But what about a situation where the insurance company needs to be able to get information from a third party, such as medical providers?
What is clear is that if the insurance company reasonably requests information from the claimant, deadlines for payment of the claim are postponed until the insurance company receives that information.
In contrast, the Prompt Pay Statute does not expressly extend any deadlines while the insurance company awaits information from third parties. However, if the insurance company cannot accept or reject a claim because it is still waiting for such information, Texas Insurance Code, Section 542.056(d) allows the insurance company a one-time 45 day extension.
This 45 day extension may not provide the insurance company sufficient time, for example, for an engineer to complete an inspection, conduct necessary studies, and write a report. The statute does not give insurance companies an answer to this dilemma, other than to deny the claim, at the risk of incurring the 60 day penalty, or pay the claim, based on an incomplete investigation.
On the other hand, insurance companies are normally in a better position to speed the claim investigation process than are the insureds. In many cases, the statutory time limits will be sufficient. In those instances where an insurance company must accept or reject a claim without sufficient time to receive all information, arguably, the statute is a legislative choice to put the risk of delay on the insurance company, instead of the insured.
The statute allows the insurance company to request information it reasonably believes will be required. Deadlines are then postponed while the insurance company waits for this information from the claimant. An unreasonable request by the insurance company would not postpone any deadlines and thus could lead the insurance company to violate the statute by failing to meet a deadline according to the 2000, Corpus Christi Court of Appeals opinion styled, Colonial County Mut. Ins. Co. v. Valdez.