Delay In Paying A Claim

When an insurance company delays in paying a claim, the claimant may be entitled to relief under the Texas Prompt Payment of Claims Act.

The Texas Prompt Payment of Claims Act, Section 542.060 provides that

(1) if an insurer that is liable for a claim under an insurance policy is not in compliance with this subchapter, the insurer is liable to pay the holder of the policy or the beneficiary making the claim under the policy, in addition to the amount of the claim, interest on the amount of the claim at the rate of 18 percent a year as damages, together with reasonable attorney’s fees

(2) if a suit is filed, the attorney fees shall be taxed as part of the cost in the case.

This provision for 18% per annum damages, is in addition to the amount of the claim, and attorney fees.

As stated in the 1999, Tyler Court of Appeals opinion, Dunn v. Southern Farm Bur. Cas. Ins. Co., these damages are recoverable whenever the insurer fails to comply with any of the requirements of the statute.

Several courts in Texas have held that an insurer who denies a claim and is found liable necessarily violates the section that requires payment within 60 days after the insurer receives necessary information.  One court explained this saying, as long as the insurer is found liable under the policy, this fee attaches, even if the insurer had a reasonable basis for denying coverage.  The Court was the United States 5th Circuit, a 1998 opinion styled, St. Paul Reinsurance Co., Ltd. v. Greenburg.

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