Prompt Payment Of Claims Act After Appraisal

Recent Texas Supreme Court opinions have been helpful to Texas insureds.  The help comes in the form of the Court deciding that an insurer by merely paying an appraisal award is no longer able to wash their hands of the case.  The insured can still seek remedy under the Texas Prompt Payment of Claims Act (TPPCA).

The case is from the Texas Supreme Court and is styled, William Marchbanks v. Liberty Insurance Corporation.

At issue in this insurance dispute is whether an insurer’s payment of an appraisal award bars an insured’s claims under the TPPCA, codified as Chapter 542 of the Insurance Code.  The court of appeals concluded it did.  Because the court of appeals’ opinion is inconsistent with recent decisions on this issue, this Court now reverses.

William Marchbanks’s residential property sustained hail and wind damage.  After its first inspection, Liberty Insurance Corp., Marchbanks’s insurance provider, determined that there was no property damage attributable to a storm and therefore denied coverage.  Fifteen months later, Marchbanks sought another inspection of his property.  In response, Liberty requested information from Marchbanks to reopen his case, and it sent another adjuster to the property.  After the second inspection, Liberty valued the damage at $387, which was below the insurance policy’s deductible.  Liberty did not notify Marchbanks of this denial until almost three months after its decision.  Believing the property damage was still undervalued, Marchbanks sued Liberty, alleging breach of contract and several extra-contractual claims.  Six months after Marchbanks filed suit, Liberty successfully moved the trial court to compel appraisal.  The appraisal award exceeded Liberty’s prior estimates.  Liberty paid the award to Marchbanks and subsequently moved for summary judgment on all his claims.  The trial court granted Liberty’s motion and rendered a take-nothing judgment.

Marchbanks filed a petition asking this Court to decide whether payment of an appraisal award extinguishes TPPCA liability as a matter of law.  Meanwhile, this Court decided two cases relevant to the issues Marchbanks raises in his petition.  In Barbara Technologies Corp. v. State Farm Lloyds, this Court held that “payment in accordance with an appraisal is neither an acknowledgment of liability nor a determination of liability under the policy for purposes of TPPCA damages under section 542.060.”  On the same day, this Court restated in Ortiz v. State Farm Lloyds that “an insurer’s payment of an appraisal award does not as a matter of law bar an insured’s claims under the Prompt Payment Act.”

The Court of Appeals is reversed and the case is remanded to the trial court to consider Marchbank’s TPPCA claim in light of these decisions.

Contact Information