The Texas Insurance Code provides for penalties to insurance companies who pay a claim late. This is illustrated in a 2022, opinion from Texarkana Court of Appeals. The opinion is styled, State Farm Mutual Automobile Ins. Co. & State Farm County Mutual Ins. Co. Of Texas v. Greg Rumbaugh.
Greg Raumbaugh sued State Farm after State Farm failed to pay personal injury protection (PIP) benefits “not later than the 30th day after the date the insurer received satisfactory proof of a claim,” as required by Texas Insurance Code, Section 1952.156. Cross motion for summary judgement were filed and the trial court ruled in favor of Rumbaugh. This appeal followed. The sole question raised in this appeal is whether the trial court erred by resolving cross–motions for summary judgment in Rumbaugh’s favor, thereby determining that he was entitled to statutory penalties under Section 1952.157 of the Texas Insurance Code even though PIP benefits were paid before the lawsuit was filed.
PIP coverage is a form of no–fault insurance. PIP’s limitation to medical expenses and lost wages, along with its collateral-source and no-fault features, are designed to simplify and hasten claim resolution and payment. Because Section 1952.157 provides for “a penalty of 12 percent,” among other things, if an insurer fails to pay PIP benefits “when due,” the trial court properly ruled that Rumbaugh was entitled to statutory penalties when PIP benefits were paid past Section 1952.156’s statutory deadline, even though they were paid before the lawsuit was filed.