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February 4, 2025
McLaurin Law

What Are My Rights If My Insurance Company Delays Payment in a Homeowners’ Insurance Claim?

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Insurance companies have a duty to pay out homeowners’ insurance claims promptly. If you’ve been waiting weeks or even months to receive the payment your insurance company owes you, you have the right to take action and potentially pursue additional compensation for the delay. 

Learn more about your rights if an insurance company delays payment in Texas. 

Understanding Texas’s Prompt Payment of Claims Act

In 2003, Texas passed Section 542 of the Insurance Code (also called the Prompt Payment of Claims Act) to address the common tendency of insurance companies to delay payouts. This act provides strict rules for the timeline insurers must follow during the claims process. Under normal circumstances:

  • The insurer must acknowledge the claim within 15 days of your submission and request any additional details they need to approve or deny the claim.
  • The insurer must approve or deny the claim within 15 days of when you provide any requested documentation. 
  • If your claim is approved, the insurer must send your payment within five business days from the date of your approval.

Insurers do have some leeway if they need extra time to process a homeowners’ insurance claim, but they must communicate with you. They’ll need to notify you of the delay and provide a complete explanation. Even with any delays, the insurer needs to approve or deny the claim within 45 days of the extension request or within 60 days of you providing additional details. 

With these deadlines in mind, your claim should take no more than three months to process, but in many cases, the timeline should be much shorter than this. 

What If an Insurer Fails To Provide Prompt Payment? 

So, what happens if you encounter unreasonable claim delays? If your insurer fails to meet the deadlines above, they could be exhibiting bad faith insurance practices. This occurs when an insurance company goes against its obligation to clients. 

You can pursue legal action when a company exhibits bad faith practices, but you can also hold an insurer accountable for violating the Prompt Payment of Claims Act. You may have the right to claim a prompt payment penalty from the insurer in addition to the amount of your original payout. This penalty is worth approximately 18% of your payout amount, plus any attorney’s fees. 

An attorney can help you prove the following to secure your prompt payment penalty:

  • You submitted a valid, covered claim under the insurance policy. 
  • The insurer is responsible for paying out the claim, according to the policy details. 
  • The insurer violated any section of the Prompt Payment of Claims Act. 

Evidence to support these notions can include detailed records of your homeowners’ insurance claim, copies of timestamped emails and phone call communications with the insurer, and copies of the insurance policy.

If your attorney believes you also have a case for bad faith insurance practices, you may be able to pursue legal action on top of this penalty, potentially securing additional compensation. 

Seek Legal Assistance With Your Homeowners’ Insurance Claim From McLaurin Law PLLC

Receiving prompt payment from an insurance claim is important to your ability to move forward after serious damage to your home. Has an insurance company failed to provide a prompt payout for your homeowners’ insurance claim? McLaurin Law PLLC can help you explore your legal remedies for the insurance company’s wrongdoing. 

Insurance coverage is one of our main practice areas, and we are well versed in Texas’s insurance laws and statutes. We can help you protect your rights to additional compensation after an insurance company’s failure to pay. Contact us today at 713-461-6500 to request a consultation. 

Copyright © 2024. McLaurin Law, PLLC. All Rights Reserved.
The information in this blog post (“post”) is provided for general informational purposes only and may not reflect the current law in your jurisdiction. No information in this post should be construed as legal advice from the individual author or the law firm, nor is it intended to be a substitute for legal counsel on any subject matter. No reader of this post should act or refrain from acting based on any information included in or accessible through this post without seeking the appropriate legal or other professional advice on the particular facts and circumstances at issue from a lawyer licensed in the recipient’s state, country, or other appropriate licensing jurisdiction.
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