Accept Or Reject Claim

Arlington insurance attorneys need to know one case real well as it relates to an insurance company accepting or rejecting a claim.
The case is a 1999, Tyler Court of Appeals case styled, Dunn v. Southern Farm Bureau Casualty Insurance Company. This case tells insurance lawyers many things.
1) That each separate claim filed by an insured requires written acknowledgement. It is arguable that separate acknowledgements are required for separate claims arising from the same accident.
2) An insurance company must commence investigation of a claim within 15 days after receiving notice of the claim unless it is a surplus lines insurance company, then it has 30 days.
3) The Prompt Payment of Claims Statute, Section 542.055(a)(3), requires that the insurance company must request from the claimant all items it reasonably believes to be necessary to evaluate the claim and that additional requests may be made if they become necessary. It is important to point out that multiple requests are permitted only when “necessary.” That multiple incremental requests may be an unfair insurance practice.
The question that can come up is, what about the insurance company’s need to get information from third parties such as medical reports, expert reports, police reports, etc. Most insurance companies are currently informing the claimant in writing that they are waiting to process the claim until such information is obtained.
4) Section 542.056(a) requires the insurance company to give written notice it is accepting or rejecting the claim. A telephone call is not sufficient. Neither is just acknowledging that the claim has been received.
The Prompt Payent of Claims Act does not require the insurance company to pay every claim within a certain time. It simply requires steps to be taken within a specified time frame. Nothing in the Act says that the insurance company can not dispute and deny the claim. In fact the statute is premised on the presumption that insurance companies have the right to dispute claims. The statute only requires that they do so promptly.
Some insurance companies have attempted to comply with the Act by informing the insured their claim is “covered” during the required time period, but then taking a longer period of time to calculate the amount of benefits owed. It is doubtful whether this is sufficient to comply with the statute. Because a “claim” is more that an request for coverage, a decision on the claim, including the value, arguably must be made and communicated to the insured in the time required by the statute unless an extension is requested. Further, the term “claim” is not defined as “coverage”; it is a demand for policy benefits that must be paid.
The purpose of this law should be clear from it’s name, to get companies to handle and promptly pay claims it owes. When a claimant makes a claim, they have suffered a loss and that loss is causing hardship to the claimant that needs to be resolved as quickly as possible and not at the “leisure” of the insurance company. When the company is violating the rules an experienced Insurance Law Attorney needs to be sought out to make sure the insurance company is held accountable.