Insurance Claim Check Delayed? See the Texas Prompt Payment of Claims Act

The Texas Insurance Code protects consumers from unfair insurance practices. One of the ways it does so is by allowing consumers to bring lawsuits against insurance companies when they act in bad faith. 

Insurance claim check delays are an example of insurance company bad faith. Sec. 542.001 of the Insurance Code is called the Unfair Claim Settlement Practices Act. It applies (with some exceptions) to insurance companies and mutual aid and mutual insurance companies that provide:

  • Life, health and accident insurance
  • Property damage from fire, hail or storms
  • Casualty insurance
  • Burial associations, fraternal benefit organizations
  • And a few other types of policies

The Act states that insurers cannot engage in the following unfair insurance claim settlement practices:

  • Knowingly misrepresenting pertinent facts about the policy coverage
  • Failing to promptly acknowledge receipt of a claim and acceptance or rejection
  • Failing to adopt reasonable standards for the prompt investigation of claims
  • Failing to make a good faith effort to arrive at a prompt, fair and equitable settlement when liability is reasonably clear
  • Compelling policyholder to bring a lawsuit to recover the moneyed to them because the insurance company has offered substantially less than the amount the policyholder finally recovers as a result of a lawsuit

What is the Definition of “Prompt?”

Section 542.055 defines promptness for standard insurance companies in this way:

  • Receipt of Claim: An insurer should acknowledge receipt of the claim, begin investigating the claim, and request all needed information from the insured not later than 15 days after receipt of the claim. The insurance company can request additional information at a later time if needed to complete its investigation of the claim. 
  • Acceptance or Rejection of Claim: The insurance company shall notify the insured in writing if they are accepting or rejecting the claim not later than 15 days after receipt of all information from the insured. If a claim is rejected, the company must give a reason. 
  • If Arson is Suspected: If the insurance company suspects arson is involved, they shall notify the insured not later than 30 days after receiving all information. 
  • Payment: The insurance company must pay the claim no later than the 5th business day after it informs the insured it will pay on the claim. If the insured has to do something in order to receive payment, then the insurance company has 5 days from that date to make payment.  


  • If the insurance company can’t decide within the timeline above, it must communicate with the insured why it needs additional time. The insurance company then has another 45 days to arrive at a decision. 
  • In the case of natural disasters, the deadlines are extended an additional 15 days. 
  • Surplus line insurance companies – those that protect against risks a regular insurance company won’t take on – have an extended timeline.

Penalties for Insurance Company Violations

If an insurance company delays payment for valid claims for more than 60 days (90 days for life insurance), they may be required to pay the policy holder or beneficiary the amount of the claim plus 18% yearly interest from the date the claim was supposed to be paid. They also must pay reasonable and necessary attorney’s fees if the insured had to hire a lawyer.

If you’ve been the victim of insurance bad faith and a delayed insurance settlement, talk to a lawyer about your rights. Dallas consumer protection attorneys at the Fell Law Firm can help you. Call 972-450-1418 or complete our online contact form to schedule a consultation.

Leave a Reply

Your email address will not be published. Required fields are marked *