With the Arrival of Hurricane Harvey, Insurers Should Keep in Mind the Following Texas Insurance Code Claim-Handling Guidelines
- Acknowledge claim in writing and commence investigation within 15 days. § 542.055
- Request all necessary items from insured and provide instructions and blank proof of loss forms for insured to complete. § 542.055
- A reservation of rights should be issued as appropriate.
- Accept claim, reject claim, or state in writing additional time is needed, explaining why more time is needed to conduct an investigation within 15 days. § 542.056
- If additional time to investigate claim is requested, accept or reject claim within 45 days after the notice requesting additional time is provided. § 542.056(d)
- Make payment within 5 business days after acceptance of claim. § 542.057(a)
- The claim-handling deadlines above can be extended by 15 days in the event of a weather-related catastrophe or major natural disaster as defined by the insurance commissioner. § 542.059(b)
- Failure to comply with any of the deadlines set forth above can subject an insurer to statutory penalties of 18% per year on the amount of the claim, plus reasonable attorney’s fees even if there is a good faith basis for not paying the claim. § 542.060 (effective through August 31, 2017, amended by H.B. 1774)
Some Additional Issues to Consider:
- Civil Authority – Mandatory evacuations have already been issued in several Texas counties.
- Service Interruption – Power and telephone/cell service may be disrupted.
- Sue and Labor – Businesses may shut down operations in advance.
- Adjuster licensing – Texas requires all adjusters and public adjusters to be licensed in the State of Texas. There is a provision for emergency licensing of adjusters in the event of a catastrophe.
- Flood hazard zone areas—Areas identified on the Flood Insurance Rate Map can change so be aware of applicable policy limits by hazard zone.
- Flood and Wind sublimits
Click here for a PDF version of this checklist.
Posted by Thomas Cook and Jason Reeves
