Earth, Wind and Fire When Disaster Hits, Head for the Insurance

Texas Prompt Payment of Claims Act

If you live in Texas then you know that a bright sunny sky can shift to a blinding hailstorm in a matter of minutes.  Tornados?  Earthquakes?   Wind storms?  Texans know these can, and do, pop up with alarming regularity.  

That is why most sane Texans carry property insurance.  That is also why insurance-toting Texans need to know about  the Texas Prompt Payment of Claims Act.  

The TPPCA may well be your biggest hammer against an insurance company.  

Under the TPPCA, an insurance company is required to promptly pay legitimate claims.  The Act imposes some stringent deadlines.  Think of them as 15-15-5.  

 Within 15 days after the insurance company receives your claim, it must  acknowledge receipt, begin its investigation, and request from you the items, statement and forms which it reasonably  believes it will require.  It does have a right to request additional information if it believes that information is also reasonably required to evaluate your claim.

Once it has received all of the requested information from you, the insurance company has 15 days to notify you that it is accepting or rejecting your claim. 

 If the insurance company rejects your claim, then it has to state its reasons.  If it accepts your claim, then it has to pay you within 5 business days after the notice.

What if it doesn’t not meet these deadlines?  The statute has an enforcement part.  If the insurer delays payment of the claim for more than the “applicable statutory period” or 60 days, then it is liable to you for the amount of the claim, 18% annual interest on that amount, and attorney’s fees.  

To recover, all the insured has to do is to prove that the insurance company was liable for the claim and that the insurer failed to comply with at least one section of the statute in processing or paying the claim.   

Not surprisingly, the TPPCA is not a favorite among insurance companies.  

What if the wrong “done you” by the insurance company does not fit within the TPPCA box?  Never fear, there are one or two additional remedies at your disposal.  

If the insurer rejects a claim in bad faith, you may be able to sue under Chapter 541 of the Insurance Code for “an unfair or deceptive act or practice in the business of insurance.”  You could have a claim for the insurer’s failure to conduct a reasonable investigation, its wrongful denial of a claim, or its failure to resolve a claim in good faith.  

You could also sue for a simple breach of contract.  An insurance policy is, at its most basic, a contract between you and the insurance company.   If the insurance company violates its contractual obligations, then you can sue it under the contract.  

What steps should you take to preserve a claim?  Read your insurance policy.  Gather the documents that support your claim.  Take pictures.  Get your own damage estimate.  Keep an event log and a copy of all communications.  

Some people hire a public insurance adjuster or an attorney to help file or negotiate a claim.   Should you?  Consider your skillset and availability, the type and amount of damage, and the reputation of your insurance company.

Virginia Hammerle is a Texas attorney whose practice includes estate planning, guardianship and probate. Sign up for her newsletter at legaltalk@hammerle.com. Contact Hammerle Finley Law Firm to schedule a consultation at hammerle.com.