Bad Faith Lawyers – Be Aware How Insurers Can Get Around Prompt Payment

The Texas Prompt Payment of Claims Act has lots of helpful law for insured when an insurance company doesn’t pay a claim timely.  However, there the Act also has a lot of benefits for the insurers that might help them avoid liability.  Here are a few.
a.  Being an eligible surplus lines insurer extends the deadlines for acknowledging receipt of the claim, commencing the investigation, and requesting information.  This is found in section 542.055(a).
b.  Also, being a surplus lines insurer extends the deadline for paying a claim from five business days to 20 business days after the insurer notifies the claimant that the claim will be paid, or after the claimant performs any condition imposed on payment of the claim.  This is found in section 542.057(c).
c.  Waiting for information reasonably requested from the claimant effectively extends any additional deadlines until the insurer receives that information.  This is found in section 542.056(a).
d.  Making additional requests for information likewise extends the deadlines until that information is received, assuming those requests were timely.  This is found in section 542.056(a).
e.  If the insurer reasonably suspects arson, that extends the deadline for accepting or rejecting the claim from 15 business days to 30 days after the insurer receives required information.  This is found in section 542.056(b).  Because of the use of “days” and “business days” this gives the insurer one more week in arson cases.
f.  If the insurer cannot accept or reject the claim by the initial deadline, the insurer may notify the insured, and explain the reasons why the insurer needs additional time, and then the insurer had 45 more days to accept or reject the claim.  This is found in section 542.056(d).
g.  Insurers may have more than 60 days to pay a claim after they receive all requested information, if some other statute provides a longer period.  This is found in section 542.058(a).
h.  If the insurer agrees to pay the claim, the deadline for payment may be extended if the insurer conditions payment on the performance of some act by the claimant.  In that case, the payment deadline is extended until five business days after the act is performed, or 20 days for surplus lines insurers.  This is found in section 542.057(b)(c).
i.  A guaranty association may request an extension from the court.  This is found in section 542.059(a).
j.  In the event of a weather related catastrophe or major disaster, as defined by the Texas Department of Insurance, the claim handling deadlines are extended for an additional 15 days.  This is found in section 542.059(b).
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