Saginaw insurance lawyers need to be able to discuss with their clients the duties the clients have to the insurance company regarding the Prompt Payment of Claims Act.
It boils down to this, a claimant has two duties to the insurance company.
(1) to give the insurer notice of the claim; and (2) to give the insurance company all the items the insurance company reasonable needs to secure proof of final loss.
In this regard, the Texas Insurance Code, Section 542.055(a) starts the deadlines for the company to act, once notice of the claim is received. Section 542.056(a) imposes other deadlines once the company receives all information required to secure proof of final loss.
Here is a potential trap – Section 542.051(4) requires that the notice of claim be in writing. A 2005, Austin Court of Appeals case has strictly applied this statute, holding that a phone call was not sufficient.
Because the statute requires written notice, but insurance companies routinely accept notice of claims by phone, a potential trap exists. If an insured calls to give notice of a claim, the insurer may commence its investigation, but be able to argue that the statutory protections do not apply. Lawyers for insureds should try to make sure written notice was given, to avoid this argument. Often the lawyer does not become involved in time to influence the form of the notice, so it may be necessary to argue that by proceeding with the investigation the insurer has waived this right. Alternatively, any assurances or conduct by the insurer leading the insured to believe oral notice was sufficient could support an estoppel argument. Of course, an attorney for the insurer should determine if written notice was not given and, if not, argue that the statutory deadlines were not triggered. Requiring the insured to later give written notice could give the insurer a “do over” chance to meet deadlines that were blown before.
In another 1994, Austin Court of Appeals case, the court held that a phone call from the insured was sufficient notice to the insurance company.
If an insurance company receives oral notice of a claim or written notice that is deficient in some way, but the insurer proceeds to investigate anyway, the insurer may be held to have waived any complaint. The courts have ruled that insurance companies are aware of the requirement that notice of the claim be in writing. If they proceed without written notice, that is conduct inconsistent with assertion of a known right – i.e., it is a waiver.