Delay in Paying Claim

Prompt Payment Of Claims And Attorney Fees

January 11, 2014 | Mark S. Humphreys

Fort Worth insurance attorneys need to have an understanding of how the Texas Prompt Payment of Claims Act works. Here is a case that explains how it works in relation to attorney fees. It is a 2013, United States 5th Circuit Court of Appeals case styled, The City of College Station, Texas v. Star Insurance Company. Here is some of the relevant information.

Star Insurance Company (“SIC”) refused to defend or indemnify its insured, the City of College Station (“the City”), in a lawsuit brought by Weingarten Realty Investors (“WRI”), a real-estate investment trust not party to this appeal. The City settled the underlying litigation with WRI and sued SIC to recover defense costs, indemnification, and statutory penalty interest. Applying Texas law, the district court concluded that SIC had no duty to defend or indemnify the City in the litigation with WRI and, consequently, no penalty liability for late payment. This appeals court reversed the trial court and remanded for further proceedings consistent with their ruling.

The actual facts of the case are not important. What is important is that the court ruled in favor of the insurance company and that on appeal this appeals court ruled that not only should the insurance company paid for a defense in the case, but their failure to do so results in the insurance company having to pay for violations of the Prompt Payment of Claims Act on those attorney fees.

Delay In Paying The Claim?

September 22, 2013 | Mark S. Humphreys

Palo Pinto attorneys who handle insurance situations will need to be able to distinguish between situations where an insurance company can be held liable for not paying a claim and where they cannot be held liable for paying a claim.

The United States District Court for the Southern District of Texas issued a ruling at the end of July that hits on this topic. The style of the case is, Sebring Apartments, et al., v. Lexington Insurance Companym et al.,

This was a summary judgment case decided in favor of Lexington. Here are points made by the court when it rendered its opinion.

What Is A Defense For The Insurance Company In Paying A Claim Promptly

September 3, 2013 | Mark S. Humphreys

A Grand Prairie insurance attorney needs to be able to distinguish between legitimate requests for information by an insurance company and requests that are not so necessary for their investigation of a claim.

The Prompt Payment of Claims Act allows the insurance company to request information it reasonably believes will be required. Deadlines are then postponed while they wait for this information from the claimant. An unreasonable request by an insurance company will not postpone any deadlines and thus lead the insurance company to violate the statute regarding deadlines.

The Corpus Christi Court of Appeals issued an opinion in 2000, that provides so pretty good guidance on this issue. The style of the case is, Colonial County Mutual Insurance Company v. Valdez. Here is some relevant information.

Late Payment And Cumulative Remedies

August 31, 2013 | Mark S. Humphreys

Dallas insurance lawyers are probably already aware of some of the penalties and remedies available when an insurance company violates the Texas Prompt Payment of Claims Act.

Section 542.061, should be known and read by all insurance attorneys. It says:

“The remedies provided by this subchapter are in addition to any other remedy or provision provided by law or at common law.”

Penalties For Not Paying Promptly

August 29, 2013 | Mark S. Humphreys

Fort Worth insurance lawyers would know the penalties available when an insurance company does not promptly pay a claim.

The Prompt Payment of Claims Act provides for 18% per annum damages, in addtion to the amount of the claim, plus attorney fees, plus this is on top of other types of remedies that may be available.

Section 542.060 says:

When Should I Get A Check From The Insurance Company?

August 27, 2013 | Mark S. Humphreys

Tarrant County Insurance lawyers should be able to give you a response to the above question.

The first place to look for guidance is the Texas Insurance Code, Section 542.057(a). This section requires payment by the fifth business day after the claim is accepted by all insurance companies except surplus lines insurance companies. Surplus lines insurance companies have 20 business days to make payment.

The 1998, case Daugherty v. American Motorists Insurance Company is from the Houston Court of Appeals [1st Dist.] and has held that oral notice that the insurance company intends to pay the claim is not sufficient.

Why Did The Insurance Company Deny The Claim?

August 25, 2013 | Mark S. Humphreys

Tarrant County attorneys who handle insurance cases need to understand the rules related to the Texas Prompt Payment of Claims Act.

Texas Insurance Code, Section 542.056(c) says “If the insurer rejects the claim, the notice required by Subsection (a) or (b) must state the reasons for the rejection.” Arguably, an insurance company that fails to comply with this requirement could be held to have waived additional reasons that were not timely raised. However, this argument was rejected in a 2005, 5th Circuit Court of Appeals case. That court stated that the insurance company could raise an additional defense, where there was no allegation that the initial reason was unreasonable or made in bad faith.

Here is something to think about:

Insurance Company Responsibility To Accept Or Reject Claim

August 24, 2013 | Mark S. Humphreys

Dallas County insurance attorneys will understand the responsibilities of an insurance company to accept or reject an insurance claim.

Usually the first thing an experience Insurance Law Attorney will ask of a potential new client who says their claim has been denied, is a copy of the rejection letter.

Texas Insurance Code, Section 542.056(a), is the statute that requires an insurance company to give written notice it is accepting or rejecting a claim. A telephone call from the insurance adjuster notifying the claimant of the amount of the loss will not constitute “notice of payment of claim,” because the statute requires that the acceptance or rejection be in writing. This was an issue that went against the insurance company in the Houston, 14th District, Court of Appeals case styled, Daugherty v. American Motorists Insurance Company. Further, the insurance company’s written response acknowledging only that a claim has been received does not constitute an acceptance or rejection under the statute. This was made clear in the Corpus Christi Court of Appeals case styled, Northern County Mutual Insurance Company v. Davalos.

What Insurance Companies Have To Do

August 13, 2013 | Mark S. Humphreys

Parker County lawyers who handle insurance cases need to know some of the duties imposed on insurance companies when handling a claim for benefits.

The Texas Prompt Payment of Claims Act is found in the Texas Insurance Code. It details the duties imposed on an insurance company when a claim is made.

When an insurance company receives notice of a claim from one of its insureds, there are four duties that are imposed on them.

Making A Claim

August 11, 2013 | Mark S. Humphreys

Parker County attorneys who deal with insurance companies need to understand the obligations of insureds making a claim.

Though an insured may end up doing many things, the actions are boiled down to two basic duties:

1) to give the insurance company notice of the claim; and 2) to give the insurance company all items they reasonably need to secure proof of loss. Texas Insurance Code, Section 542.055(a) starts the deadline for the insurance company to act, once they receive notice of the claim. Section 542.056(a) imposes other deadlines once they receive all information required to secure final proof of loss.