YOUR RIGHTS UNDER TEXAS INSURANCE LAWThe rules your insurer has to follow.
Texas law sets deadlines for how fast insurers must respond and pay, bars unfair claim practices, and adds penalties when they break the rules. We spent years helping insurers meet these rules. Here they are in plain English.
THE CLAIM CLOCK at a glance.
- 15days after noticeAcknowledge the claim, start investigating and request what they need from you.
- 15business days after your documentsAccept or reject the claim in writing, or explain why they need more time (up to 45 more days).
- 5business days after acceptingPay the claim once they've told you they'll pay it.
- 60days after your documentsIf payment is delayed past this point, statutory interest and attorney's fees can be owed.
Texas Insurance Code §§ 542.055–542.060. Surplus lines insurers get 30 days for the first step, and deadlines can extend 15 days after a declared weather catastrophe. Calculate your dates.
PROMPT PAYMENT & PENALTIES
Chapter 542 of the Texas Insurance Code, often called the Prompt Payment Act, sets the claim clock above. When an insurer is liable for a claim and doesn't pay on time, it owes the claim plus interest as damages and reasonable attorney's fees.
- Most claims: interest at 18% a year.
- Weather claims under Chapter 542A: a lower rate, tied to the state's post-judgment interest rate plus 5%.
The clock for most deadlines starts when the insurer receives all the items it reasonably asked for, so keep copies of everything you send and when you sent it.
UNFAIR CLAIM PRACTICES
Chapter 541 of the Insurance Code prohibits unfair settlement practices. Among them:
- Misrepresenting what the policy covers.
- Failing to attempt a prompt, fair settlement once liability is reasonably clear.
- Failing to promptly explain the reason for a denial or a low offer.
- Failing to accept or deny coverage within a reasonable time.
- Refusing to pay without a reasonable investigation.
A homeowner can recover actual damages and attorney's fees, and up to three times actual damages when the insurer acted knowingly.
WHAT "BAD FAITH" MEANS IN TEXAS
Texas recognizes a duty of good faith and fair dealing between insurers and their policyholders. Breaching it generally means denying or delaying payment when the insurer knew, or should have known, that its liability was reasonably clear.
A bona fide dispute over coverage or value isn't bad faith on its own. Usually the claims succeed or fail on the paper trail: what the insurer knew and when.
Insurers track these deadlines closely, because missing one costs them. Homeowners who track them too negotiate from a much stronger position.
WEATHER CLAIMS: THE 61-DAY RULE
Since 2017, Chapter 542A has applied to claims caused by forces of nature, like hurricane, hail, wind, tornado, rainstorm and flood. Before filing suit, a homeowner must send written notice at least 61 days in advance, stating the specific amount claimed and the attorney's fees incurred so far.
- The insurer can ask to inspect the property within 30 days of receiving the notice.
- The amount in your notice can limit the attorney's fees you recover later, so it needs to be well supported.
- Skipping the notice can delay your case and cut off fees.
DEADLINES TO SUE
| Claim | Typical deadline |
|---|---|
| Breach of the policy | Four years by statute, but many policies shorten it, often to two years and one day from the date of loss. Texas doesn't allow less than two years. |
| Unfair practices (Ch. 541) | Two years from the unfair act, or from when you discovered it or reasonably should have. |
| Bad faith | Generally two years, often measured from the denial. |
| TWIA windstorm policies | Coastal windstorm claims have their own short deadlines: notice of the claim within one year of the loss, and strict timelines to dispute and sue. |
FILING A TDI COMPLAINT
The Texas Department of Insurance accepts complaints about claim handling online. A complaint can prompt the insurer to respond in writing and take a second look. It won't award you money, and it doesn't pause your deadlines to sue.
FREQUENTLY ASKED QUESTIONS
How long does an insurance company have to pay a claim in Texas?
Generally, five business days after it notifies you that it will pay. It must decide within 15 business days after receiving the documents it requested, with up to 45 more days if it explains why it needs them.
What is the 18% penalty?
Under the Prompt Payment Act, an insurer that is liable and pays late owes interest of 18% a year on the claim, plus attorney's fees. Weather claims under Chapter 542A use a lower interest rate.
Can I sue the adjuster personally?
For weather claims, Texas lets the insurer accept responsibility for its adjuster, which usually takes the adjuster out of the case. For other claims, it depends on what the adjuster did.
Does the law apply to every insurer?
Most homeowners insurers in Texas are covered. Some programs, like TWIA windstorm coverage and federal flood policies, follow different rules.