Requesting Coverage On A Claim

Insurance attorneys know what the requirements are that are placed on an insurance company when one of their customers make a claim.  These requirements are found in Texas Insurance Code, Section 542.051 thru 542.061.

Section 542.056(a) requires the insurance company to give written notice it is accepting or rejecting the claim.  The Court of Appeals, Houston [14th Dist.] in a 1998 opinion, styled Daugherty v. American Motorists Insurance Company, tells us a telephone call from the insurance company notifying the insured 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.  However, an insurance company’s written response acknowledging only that a claim has been received does not constitute an acceptance or rejection under the statute either.  This is pointed out in a 2002, Corpus Christi Court of Appeals opinion styled, Northern County Mutual Insurnace Company v. Davalos.

The statute does nor require that the insurer pay every claim, only that it promptly investigate, and accept or reject the claim.  In Dunn v. Southern Farm Bureau Casualty Insurance Company, a 1999, Tyler Court of Appeals opinion, the court stated:

(Section 542) does not require an insurer to pay every claim within a certain time.  It simply requires steps to be taken with 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 claim.  It merely requires that they do so promptly.

Some insurance companies have attempted to comply with Chapter 542 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 a request for coverage, a decision on the claim, including its value, arguable 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 time limits for payments of a claim are stated in Section 542, but a careful reading of these statutes shows a lot of room for variables to come into play.  As an example, the time limits for the insurance company to make certain determinations or decisions is based on the responses they receive from their insured and the time when they receive these responses.  To be on the safe side an insured should keep records of any and all communications with their insurance company.  This includes, letters, emails, faxes, text messages, or whatever other form the communication may take place, such as verbal communications.  For verbal communications, the insured should make notes of the conversation.