Insurance Company Responsibility To Accept Or Reject Claim

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.
This statute is not requiring that the insurance company pay every claim, only that it promptly investigate, and accept or reject the claim. In the Tyler Court of Appeals case, Dunn v. Southern Farm Bureau Casualty Insurance Company, the court stated:
(This section) does not require an insurer to pay every claim within a certain time. It simply requires steps to be taken within a specified time frame … Nothing in the statute suggests that the insurance company could not dispute and deny the claim. Indeed the statute is premised on the presumption that carriers have the right to dispute claims. It merely requires that they do so promptly.
It should be noted that some insurance companies have attempted to comply with the Prompt Payment of Claims 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 than a request for coverage, a decision on the claim, including its 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.