What Insurance Companies Have To Do

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.
1) Pursuant to Section 542.055(a)(1), the insurance company must acknowledge the claim.
2) Pursuant to Section 542.055(c), the insurance company shall make a record of the date, means, and content of the acknowledgement of the claim unless the acknowledgment is made in writing.
3) Pursuant to Section 542.055(a)(2), the insurance company must commence their investigation of the claim.
4) Pursuant to Section 542.055(a)(3), the insurance company must request from the claimant all items, statements, and forms that the insurance company reasonably believes, at that time, will be required from the claimant.
Most insurance companies must perform these duties “not later than the 15th day after receipt of notice of a claim.” The Act has exceptions to this rule, one being that eligible surplus lines insurance companies have until the 30th business day.
It is worth pointing out that Section 542.051(1), defines “business day” to exclude weekends and state holidays. Some parts of the act speak of “days” and other parts speak of “business days.” Because of this distinction, most insurance companies have about two weeks, but eligible surplus lines insurance companies have six weeks.
In a 2007, Texas Supreme Court case, Lamar Homes, Inc. v. Mid-Continent Casualty Co., the Court found that in the context of an insured’s claim for a defense, the insured needs to provide the insurance company with the statements or invoices for legal services that the insured receives in order to trigger the statutory deadlines.
It is not hard to see that the actions to be taken and the deadlines for the taking of such actions can be confusing and can vary quite a bit. That is why it is important to write down and document events as they happen and as soon as you think something is not right, to contact an experienced Insurance Law Attorney.