Delay in Paying Claim

Prompt Payment Of Claims Statute – Other Issues

July 24, 2023 | Mark S. Humphreys

The Texas Prompt Payment of Claims statute is helpful to claimants when an insurance company drags it feet on paying a claim. This statute is found in the Texas Insurance Code, Sections 542.051 – through 542.061.

When an insurance company reasonably requests information from a claimant, deadlines are postponed until the insurance company receives the requested information.

In contrast, the 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, Section 542.056(d) allows the insurance company a one-time, 45 day extension.

Late Payment Of Claim – Can The Insurance Company Get Away With It

July 22, 2023 | Mark S. Humphreys

The Texas Prompt Payment of Claims Act is found in the Texas Insurance Code, Section 542.051 thru 542.061. When an insurance company fails to timely pay a claim, are there ways they can escape liability under the Prompt Payment of Claims Act?

If the insurance company cannot accept or reject the claim by the initial deadline, the statute lets the insurer notify the claimant that it cannot accept or reject a claim by the deadline. This is found in Section 542.056(d). This notification has to be sent before the original deadline, and the notice must state the reason why the insurance company needs additional time. The insurance company then has 45 additional days to accept or reject the claim.

The insurance company’s good faith – or its lack of bad faith – is no defense. This is discussed in the 1997, United States 5th Circuit Court of Appeals opinion styled, Higginbotham v. State Farm Mutual Automobile Insurance Company. In reaching this conclusion, the court noted that precedents under the predecessor statute, article 3.62, held that an insurance company’s good faith in denying a claim did not relieve them of liability for penalties. The court concluded that an insurance company that denies a claim takes the risk that it will have to pay additional damages allowed by the statute.

Bad Faith Lawyers – Be Aware How Insurers Can Get Around Prompt Payment

July 8, 2023 | Mark S. Humphreys

The Texas Prompt Payment of Claims Act has lots of helpful law for insured when an insurance company doesn’t pay a claim timely. However, there the Act also has a lot of benefits for the insurers that might help them avoid liability. Here are a few.

a. Being an eligible surplus lines insurer extends the deadlines for acknowledging receipt of the claim, commencing the investigation, and requesting information. This is found in section 542.055(a).

b. Also, being a surplus lines insurer extends the deadline for paying a claim from five business days to 20 business days after the insurer notifies the claimant that the claim will be paid, or after the claimant performs any condition imposed on payment of the claim. This is found in section 542.057(c).

Insurance Company Delay In Paying A Claim

May 22, 2023 | Mark S. Humphreys

When an insurance company delays in paying a claim, there are often times remedies. Each case has to be looked at to determine what can be done. This issue is discussed in a 2023 opinion from the Southern District of Texas, Victoria Division. The opinion is styled, Naomi Odom v. Central Mutual Insurance Company.

This is a case wherein Odom suffered hurricane damage and made a claim for benefits. Central Mutual made an initial payment and then two additional payments. Later, another payment was made.

Odom was unsatisfied and eventually filed suit alleging breach of contract and other extra-contractual claims. Central Mutual invoked appraisal and upon completion of the appraisal, paid substantially more money on the claim.

Claims for Late Payments – Insurance

March 11, 2023 | Mark S. Humphreys

Insurance claims for late payment are a frequent issue when someone sees an insurance lawyer about the way they have been treated in an insurance claim. This late payment issue is addressed in a 2023 opinion from the Northern District of Texas, Dallas Division. The opinion is styled, Craig Collins v. State Farm Lloyds.

In this case the insured suffered damages from a tornado. A claim was made immediately and State Farm sent out an adjuster. The initial found some damages and paid the damages. Collins asserted there were more damages and another adjuster investigated the claim and found more damages and paid those damages. Collins asserted there were still more damages and a third adjuster came out and additional damage was found and the damages were paid.

Collins sued for various causes of action including violations of the “duty of good faith and fair dealing,” Texas Insurance Code damages under Section 541, and finally for damages under Section 542. A reading of the case shows a discussion of the first two and here is the discussion under the Section 542, Prompt Payment of Claims.

Delay In Paying Insurance Claim – What The Lawyer Should Know

October 10, 2022 | Mark S. Humphreys

Bad Faith Insurance Attorneys need to read this 2022, opinion from the 14th Court of Appeals. The case is styled, Texas Fair Plan Association v. Adil Ahmed.

The Blog from October 8, 2022, sets forth the law related to this Texas Prompt Payment of Claims fight. The facts and procedural history of the case can be obtained from the opinion.

This is an appeal from summary judgment.

Delay In Paying Claims – Insurance Denial Lawyers

October 8, 2022 | Mark S. Humphreys

The Texas Prompt Payment of Claims Act is at issue in this 2022, opinion from the 14th Court of Appeals. The opinion is styled, Texas Fair Plan Association v. Adil Ahmed.

The facts and history of the case can be gleamed from reading the opinion.

This Courts’ stating of the law regarding the Texas Prompt Pay statute is what is relevant to this posting.

Texas Prompt Payment Of Claims Act

September 24, 2022 | Mark S. Humphreys

Insurance Claims, when not timely paid are subject to the Texas Prompt Payment of Claims Act. So the question becomes when is a claim not timely paid?

A 2022, opinion from the Western District of Texas, San Antonio Division, is worth reading. The opinion is styled, John H. Winston III v. State Farm Lloyds.

This case arises from a dispute between Dr. Winston and his homeowner’s insurance carrier, State Farm. In April 2019, Dr. Winston filed a claim with State Farm for hailstorm damage to his home. State Farm paid Dr. Winston based on its inspector’s assessment of the damage. Dr. Winston was dissatisfied with the payment because the parties disagree about the extent of the damage—specifically, Dr. Winston contends that his roof needs to be replaced, while State Farm believes it could be repaired. When the parties reached an impasse, Dr. Winston invoked an appraisal clause in the parties’ contract to determine the actual amount of loss. The appraisal was conducted in October 2019, finding that $91,138.71 was necessary to replace the roof. State Farm continued to maintain that the roof did not need to be replaced. As such, State Farm reduced the appraisal award by $91,138.71 and paid Dr. Winston the amount it estimated was necessary to repair the roof, plus some additional funds for other damages to the home. All told, State Farm paid Dr. Winston $28,193.74 for hail damage. At issue in the case was whether State Farm breached the parties’ contract by refusing to pay $91,138.71 to replace Dr. Winston’s roof. The case went to trial and a jury found that State Farm had breached the contract.

Appraisal And Delays In Paying A Claim

October 9, 2021 | Mark S. Humphreys

The United States 5th Circuit Court of Appeals issued an opinion on August 12, 2021, that is noteworthy for Insurance Law attorneys. The opinion is styled, Randy Randel; Debra Randel v. Travelers Lloyds of Texas Insurance Company.

After a fire at their home, the Randels filed a claim for benefits from their home insurance company, Travelers. Eventually the parties agreed to an appraisal and the appraisal award was closer to the Randel’s view of the damages. Travelers had already paid an amount they thought was proper. After the appraisal Travelers paid the full appraisal amount.

The Randels brought suit against Travelers for breach of contract and violation of the Texas Prompt Payment of Claims Act. The breach of contract claim was denied by the Court but the Texas Prompt Payment of Claims violation went forward in the lawsuit.

Delay In Paying An Insurance Claim

September 27, 2021 | Mark S. Humphreys

A Federal Court for the Western District of Texas, Midland/Odessa Division issued an opinion in 2021, that deals with the Texas Prompt Payment of Claims Act (TPPCA). The style of the opinion is long. We will call it Woodcrest Capital, LLC, et al v. Zurich American Insurance Company.

The TPPCA is found in Chapter 542 of the Texas Insurance Code. Chapter 542 of the TIC does not contain a statute of limitations. District courts in the Fifth Circuit are split on whether a two–year or four–year statute of limitations applies to claims brought under Chapter 542, and the Fifth Circuit has not considered the issue. The dispute is whether the two-year statute of limitations included in Chapter 541 of the TIC or the four-year statute of limitations in Section 16.051 applies to claims arising under Chapter 542.

Plaintiffs contend Defendant violated Section 542.058 when it failed to pay Plaintiffs’ insurance claims within sixty (60) days after receiving all items, statements, and forms requested. Plaintiffs conclude that their TPPCA claim arises under the statute, not under the Policies; therefore, the contractual limitation does not apply to their TPPCA claim. Additionally, Plaintiffs argue the contractual limitation in the Policies does not apply to the TPPCA claim because the language in the Policies suggests that it only applies to claims for breach of duties imposed by the Policies. The Court agrees with Plaintiffs.