Prompt Payment And Appraisal

What is the result oi an insurance company pays a claim after an appraisal even if you don’t agree with the appraisal?  This issue is addressed in a Houston Court of Appeals [14th Dist.] opinion.  It is styled, National Security Fire & Casualty Co. v. Hurst.

This is an appeal from a jury trial in favor of Hurst against National.  This appeals court reversed the jury trial results.

Dissatisfied with the initial estimate and payment, Hurst sued National and others for claims arising out of a wind and hail storm damage to his home.  This lawsuit also claimed violations of the Texas Prompt Payment of Claims Act.  National hired adjusters who assessed the damage and paid Hurst $3,524.56 (accounting for the $1,000 policy deductible), which Hurst accepted.  Hurst proceeded to file suit on September 7, 2010.

Hurst invoked the policy’s appraisal clause on February 19, 2014 and both parties hired appraisers.  Neither party could agree on the amount of the loss and the trial court appointed a Judge to serve as an umpire on the matter.  The umpire issued Hurst an award of $7,166.36 and a check was issued by National but never negotiated by Hurst.

At trial, the jury found in favor of Hurst finding National in breach of contract and awarded Hurst damages.  The damages included findings for violations of various sections of the Texas Insurance Code including violations of the Texas Prompt Payment of Claims  Act which was an 18% penalty of the contract damages.

The court looked at the various appeal points, finding in favor of National on all points.  Here is what the Court said as it relates to the Prompt Payment of Claims  Act.

Section 542.058 of the Insurance Code provides that an insurer shall pay damages, with interest, and attorney’s fees if an insurer delays payment of a claim for longer than 60 days.  As this court has recognized, full and timely payment of an appraisal award under the policy precludes an award of penalties under the Insurance Code’s prompt payment provisions as a matter of law.

The record reflects, and the jury found, the appraisal award was determined on September 25, 2014.  It is undisputed that National issued a check in payment of the appraisal award on October 25, 2014 — well within the timeliness requirements of section 542.058.  On appeal, Hurst does not claim the payment of the appraisal award was untimely, but that it was not a payment because it was accompanied by a release.  This court has determined otherwise.  Because the evidence conclusively demonstrates that National fully and timely paid the appraisal award, Hurst is precluded from maintaining his prompt payment claim as a matter of law.