Texas prompt claim payment deadlines
The Texas prompt-payment chapter strings four deadlines together. Mixing calendar days with business days is the usual mistake.
| Acknowledge, investigate, request items | Within 15 days of notice (TIC 542.055) |
| Accept or reject in writing | Within 15 business days of receiving everything needed (TIC 542.056) |
| More time needed | Say why, then decide within 45 days (TIC 542.056) |
| Pay after accepting | Within 5 business days (TIC 542.057) |
| Penalty for delay | 18% a year interest as damages plus attorney's fees (TIC 542.060) |
| Life claim settlement | Within two months of proof of death (TIC 1101.011) |
Where the point is lost: Remember the sequence 15 days, 15 business days, 5 business days, and the 18% penalty that backs it up.
Texas prompt claim payment deadlines
5 questions on Texas prompt payment of claims act, each with an explanation and statute citation.
5 questions
Pass line: 70%, same as the real exam
Questions and answers, explained
All 5 questions above, with the correct answer and why it is correct. Everything here is on texas prompt claim payment deadlines.
Under the Texas prompt-payment law, within how many days after receiving notice of a claim must an insurer acknowledge it, begin its investigation and request the items it needs?
Why: TIC 542.055 requires an insurer, within 15 days of receiving notice of a claim (30 business days for an eligible surplus lines insurer), to acknowledge it, commence any investigation and request the items, statements and forms it reasonably believes it will need.
Reference TIC 542.055 — Texas outline I.D.1.a
Under TIC 1101.011, a Texas life insurer must settle a death claim no later than how long after receiving proof of death and of the claimant's right to the proceeds?
Why: TIC 1101.011 requires the policy to provide that settlement after the insured's death will be made not later than two months after receipt of proof of the death and of the claimant's right to the proceeds.
Reference TIC 1101.011 — Texas outline II.B.10
An insurer has received every item it needs for final proof of loss. How long does it have to notify the claimant in writing whether the claim is accepted or rejected, absent suspected arson?
Why: TIC 542.056 requires written acceptance or rejection within 15 business days after the insurer receives everything needed for final proof of loss (30 days if arson is suspected). If it needs more time it must say why within that period and decide within 45 days. Once it accepts, TIC 542.057 requires payment within 5 business days.
Reference TIC 542.056-.057 — Texas outline I.D.1.a
A Texas insurer that is liable on a claim violates the prompt-payment deadlines. In addition to the claim amount, it owes the claimant:
Why: TIC 542.060(a) makes a non-complying insurer liable for the claim plus interest at 18 percent a year as damages, together with reasonable and necessary attorney's fees. TIC 542.058 triggers this when payment is delayed past the statutory period, or more than 60 days if no other period applies.
Reference TIC 542.058, 542.060 — Texas outline I.D.1.a
Which act by an insurer is an unfair claim settlement practice under TIC 542.003?
Why: TIC 542.003(b) lists unfair claim settlement practices, including compelling a policyholder to sue by offering substantially less than is ultimately recovered, failing to acknowledge claim communications promptly, failing to adopt reasonable investigation standards, and not attempting in good faith to settle when liability is reasonably clear. Asking for proof of loss and denying excluded claims with an explanation are proper.
Reference TIC 542.003 — Texas outline I.D.1.a
Drill the whole domain
- Texas Statutes and Rules Common to Life and Health (10.8%)
- Texas Statutes and Rules — Life Insurance Only (4.6%)
Other topics
- Texas agent licensing: temporary license, appointment and renewal
- Texas continuing education for life and health agents
- Texas unfair practices: rebating, twisting, defamation and discrimination
- Texas Life and Health Insurance Guaranty Association limits
- Texas required life insurance policy provisions
- Health policy uniform provisions, with the Texas numbers
- Replacing life insurance and annuities in Texas
- Texas health insurance mandates, Medicare supplements and the ACA
- Texas HMO rules for the life and health exam