Slow payment of an insurance claim can create a claim for extra monies under the Texas Insurance Code. An opinion from a 2025, Fifth Circuit case is an important read on this issue. The opinion is styled, Sterling Senechal v. Allstate Vehicle and Property Insurance Company.
This is a summary judgment opinion wherein claims were made for delays in paying the claim under Texas Insurance Code, Sections 541 and 542.
Allstate had eventually paid the claim but Senechal sued because of the slow payment. The Facts of the case can be learned from reading the opinion. The distinctions between the two sections are set forth here.
The Texas Supreme Court held that when the only “actual damages” an insured seeks to recover are policy benefits that have since been paid through an appraisal award and interest an insured cannot recover for bad faith claims under Chapter 541 of the Insurance Code or under the common law. Senechal has presented no evidence that he suffered an independent injury caused by Allstate’s alleged delayed payment of benefits, the district court did not err in granting summary judgment on these claims.
The TPPCA is codified at Chapter 542.051 et seq. of the Texas Insurance Code. In his complaint, Senechal claimed that Allstate violated three provisions of the TPPCA, which govern insurers’ obligations regarding prompt receipt, notice, and payment of claims. Sections 542.055, 542.056, and 542.058. The parties focus on section 542.058, which “provides that the insurer, upon receiving all requested information necessary to evaluate the claim, must pay the claim within 60 days.”
If an insurer violates the TPPCA, § 542.060 provides that in addition to the amount of the claim, “the insurer is responsible for 18 percent interest through the date of payment and attorney’s fees.” Unlike other provisions of the Insurance Code, § 542.060 requires neither an award for “actual damages” nor a judgment for an insured to recover attorneys’ fees. Instead, attorneys’ fees, along with statutory interest, constitute the damages to which an insured is entitled when their insurer is “liable” for a TPPCA violation.
The Texas Supreme Court has explained that an insurer is “liable” on a TPPCA claim when it “(1) has completed its investigation, evaluated the claim, and come to a determination to accept and pay the claim or some part of it; or (2) been adjudicated liable by a court or arbitration panel.”
The Texas Supreme Court affirmed its prior holding that payment of an appraisal award does not absolve an insurer of TPPCA liability when an insurer “accepts a claim but pays only part of the amount it owes within the statutory deadline.” Our court later noted that a Texas appellate court “clarified that a pre-payment of interest” also does not eliminate an insured’s “ability to collect TPPCA damages, such as attorney’s fees.”
To summarize, prompt payment of an appraisal award and statutory interest does not, as a matter of Texas law, absolve an insurer of TPPCA liability. Furthermore, no judgment of “actual damages” is required for an insured to recover attorneys’ fees for a violation of Chapter 542 of the Texas Insurance Code. Therefore, to the extent that the district court concluded that prompt payment of an appraisal award and statutory interest defeats TPPCA liability or that a judgment is required to recover attorneys’ fees for such a violation, the district court erred.