Delay In Payment Of Claim

People in Weatherford, Mineral Wells, Aledo, Azle, Springtown, Willow Park, Brock, Hudson Oaks, Millsap, Cool, Peaster, Palo Pinto, and other places in Parker and Palo Pinto Counties may wonder: How long does the insurance company have to pay the claim?
The “Prompt Payment of Claims statute” is found in the Texas Insurance Code, Sections 542.051 thru 542.061.
The “Prompt Payment of Claims statute” imposes certain deadlines for an insurance company to acknowledge, investigate, and accept or reject a claim. An insurance company that violates the statute is liable for attorney’s fees and an additional 18% per annum in addition to the amount of the claim.
The statute sets out the steps an insurer must follow when presented with a “first party” claim by an insured.
To recover a penalty under the statute act, an insured must establish that:
(1) the insured had a claim under an insurance policy;
(2) the insurer is liable for the claim; and
(3) the insurer has failed to comply with a requirement of the Act.
This was made clear in a 2001, Texas Supreme Court case styled, Allstate Insurance Company v. Bonner.
In the Bonner case, the Court considered whether an insurance company that did not comply with the claim acknowledgment deadline could be held liable under the statute even though the insurance company ultimately did not owe the claim. In that case, that insured was awarded less on her uninsured motorists claim that the insurance company had already paid in personal injury benefits. Nevertheless, Bonner argued that Allstate’s violation entitled her to recover attorney’s fees under the statute. The Court rejected this argument and held that for an insurance company to be liable under the Prompt Payment of Claims statutes, a party must establish the three elements listed above.
The Bonner case decision raises questions whether an insurance company can always disprove a claim thereby avoid liability for violating the statute, or whether the court’s holding is limited to the circumstance presented in that case.
The statute’s purpose is “to promote the prompt payment of insurance claims pursuant to policies of insurance.” This per Section 542.054.
This statute, which was revised in 2005, made several changes compared to prior laws. It applies to more insurance companies and more kinds of insurance. It imposes more deadlines. It also imposes a bigger penalty — 18% per annum, instead of a flat 12%. The statute was intended to enhance the protections for insureds and claimants, and strengthen the incentives for prompt claims handling by insurance companies.
An experienced Insurance Law Attorney is going to be needed to know whether or not the insurance company had violated the statute . The rule varies based on the type of claim and what the insurance company needs from the insured to properly investigate the claim. Many adjusters violate the provisions of this statute. These adjusters rely on the lack of knowledge most people have regarding the proper way for these claims to be handled.