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The Texas Prompt Payment of Claims Act, outlined in Chapters 542 and 542A of the Texas Insurance Code, was created to protect policyholders from unfair delays in insurance claim payments. When an insurance carrier drags its feet after receiving all the necessary information to process a valid claim, Texas law steps in.

The law sets strict timelines that insurers must follow and holds them financially accountable when they fail to do so. If they delay payment beyond those deadlines, they may be required to pay penalty interest—often a substantial percentage of the total claim amount—along with attorney’s fees.

In short, the Texas Prompt Payment Act provides property owners and claim professionals with a powerful legal tool to combat unnecessary delays and secure the compensation they’re rightfully owed.

Who’s Covered Under the Texas Prompt Payment of Claims Act?

The Texas Prompt Payment of Claims Act applies broadly to insurance companies doing business in Texas and covers most first-party property damage claims made by policyholders. This includes claims related to:

• Wind and hail damage
• Hurricane and storm losses
• Fire and smoke damage
• Water and freeze-related claims
• Other forms of residential or commercial property loss

Both residential and commercial property owners are protected under this law, regardless of whether they filed the claim themselves or worked with a public adjuster.

Special Considerations Under Chapter 542A

Chapter 542A specifically applies to weather-related events, such as hurricanes, hailstorms, or severe winter storms. It also imposes some procedural requirements, such as pre-suit notice, when legal action is being considered against an insurance carrier for late payment.

If your claim was tied to a natural disaster and the insurance company took too long to pay after receiving all required information, you may have a right to recover penalty interest, even if the claim has already been settled.

Whether you’re a policyholder or a public adjuster, if the original claim was for property damage on a Texas-based policy, and the insurer delayed payment, the Prompt Payment of Claims Act may apply to you.

Key Deadlines & Requirements

The Texas Prompt Payment of Claims Act establishes strict timelines that insurance companies must adhere to when processing property damage claims. These deadlines are meant to ensure prompt communication, timely decisions, and fair payment to policyholders.

Below are the major requirements under Chapter 542, with additional considerations under Chapter 542A for weather-related claims:

Step-by-Step Timelines 

1. Acknowledgment of Claim – Within 15 Business Days

Once you file a claim, your insurance company must:

• Acknowledge receipt of the claim
• Begin an investigation
• Request any necessary documents or additional information

2. Decision Deadline – Within 15 Business Days After Receiving All Info

Once the insurer has all the necessary information, they must accept or reject the claim within 15 business days (or provide a reasonable explanation if more time is required).

3. Payment Deadline – Within 5 Business Days After Acceptance

If the insurer accepts the claim, they must issue payment within 5 business days.

4. Penalty Window – After 60 Days from Receipt of All Info

If the insurance company delays payment for more than 60 days after receiving all required information, they may be liable to pay penalty interest on the unpaid amount.

For Weather-Related Property Damage (Chapter 542A)

If your claim stems from a weather-related event (hail, wind, hurricane, freeze, etc.), additional rules may apply:

• A 61-day pre-suit notice is required before filing a lawsuit
• Penalty interest may be reduced under certain conditions
• Insurers may limit liability for agents if notice is improperly given

What This Means for You

If your insurer took longer than 60 days to pay your claim after receiving everything they requested — even if the claim is now closed — you may be entitled to penalty interest under Texas law. The exact interest rate depends on whether the claim is governed by Chapter 542 or 542A, but in many cases, it can amount to thousands of dollars in additional compensation.

What Penalties Apply?

When an insurance company delays payment without a valid reason, Texas law doesn’t just encourage timely responses — it enforces them through financial penalties. These penalties are designed to protect policyholders and ensure that insurance carriers take deadlines seriously.

Penalty Interest Under Chapter 542

Under the Texas Prompt Payment of Claims Act (Chapter 542), if an insurer fails to make timely payment, they may be required to pay:

• 18% annual interest (simple interest) on the amount owed
• Reasonable attorney’s fees incurred by the policyholder

This interest begins to accrue 60 days after the insurer receives all requested information needed to make a payment decision.

Adjusted Penalties Under Chapter 542A

If your claim falls under Chapter 542A (weather-related property damage), the penalty interest rate may be lower than 18%. In most cases, it’s:

• Judgment interest rate + 5%

This still adds up — especially on large, delayed claim payments — but the exact amount depends on current interest rates and the size of the payout.

Chapter 542A also includes certain procedural protections for insurers, such as requiring pre-suit notice and allowing insurers to limit liability for certain agents if procedures aren’t followed correctly.

Legal Fees

In both Chapters 542 and 542A, the law allows for the recovery of reasonable attorney’s fees if the policyholder takes legal action and prevails. This adds additional pressure on insurers to avoid unnecessary delays.

Why This Matters

Penalty interest can significantly increase the total value of your claim, and it’s often money that goes unclaimed simply because policyholders (and even some public adjusters) don’t know they’re entitled to it.

Even if your claim has already been paid and closed, you may still qualify to recover penalty interest if the insurance company delayed payment beyond legal deadlines. That’s where we come in.

Why It Matters to You

Insurance delays aren’t just frustrating — they’re costly. Whether you’re a policyholder trying to rebuild after a storm or a public adjuster working to help your client recover, timely payment matters. When insurers take too long to pay, you may be legally entitled to additional compensation, even if the original claim has already been closed and paid.

For Policyholders

You’ve already gone through the stress of filing a claim, documenting damage, and waiting on your insurer. If your payout took too long to arrive, especially more than 60 days after you submitted everything they asked for, you may have missed out on thousands of dollars in penalty interest.

That money is legally owed to you under the Texas Insurance Code, and it doesn’t require a new claim or a lawsuit against your carrier — just a review of how long they delayed payment.

For Public Adjusters

As a public adjuster, you fight hard to recover every dollar for your clients. But even after a claim is settled, there may still be more on the table, without affecting your original fee. Submitting claims for review through Texas Prompt Payment not only adds value for your clients but also demonstrates your commitment to ensuring they receive every dollar they deserve.

We make the process simple and secure. You stay involved, and we handle the legal vetting in partnership with licensed attorneys — all at no cost to you or your client.

Common Misconceptions

When it comes to the Texas Prompt Payment of Claims Act, there’s considerable confusion, particularly regarding its scope and operation. Let’s clear up a few common myths:

• “My claim is already settled, so there’s nothing more I can do.”
  •  Not true. This law specifically applies to already-settled claims. If your insurer delayed payment beyond the legal timeframe, you may still be entitled to penalty interest, even if you already received your check.

 

• “This sounds like a lawsuit against my insurance company.”
  •  It’s not. This is not a lawsuit to dispute your claim or reopen it. It’s about enforcing a legal obligation that already exists: timely payment. If the insurer was late, they may owe you interest. A qualified attorney can help pursue that, often without ever going to court.

 

• “It’s not worth pursuing unless my claim was denied.”
  • It’s actually the opposite. These penalties apply when claims are accepted and paid, but the payment is made too late. The longer the delay, the more potential interest you’re owed.

 

• “Only policyholders can submit claims for review.”
  • Public adjusters can submit, too. We work with professionals across Texas who submit on behalf of clients. We’ll handle the vetting, but you stay in the loop and maintain your role with the insured.

 

• “This must cost something.” 
  • Never. Submitting your claim for review is completely free, and there’s no obligation to proceed unless your claim qualifies and you choose to move forward.

 

How Texas Prompt Payment Helps

At Texas Prompt Payment, we simplify what can be a complex legal process. Our goal is to make it easy for policyholders and public adjusters to discover whether a claim may qualify for additional compensation, all without reopening the claim or dealing with legal uncertainty on your own.

Here’s how we help:

1. 1. We Review Settled Claims: We specialize in identifying claims that may qualify for penalty interest under Chapter 542 or 542A of the Texas Insurance Code. All we need are a few key details, such as when the claim was filed, when it was paid, and what documentation was submitted.

• We Partner with Qualified Law Firms: If your claim appears to meet the eligibility criteria, we’ll refer it to a licensed attorney for a free legal review. These legal professionals can evaluate whether there’s an opportunity to recover penalty interest from the insurer.

• You Choose: There’s no obligation to move forward. If you’re a policyholder, you decide whether to proceed after the legal review. If you’re a public adjuster, you remain part of the process, and your role—including your compensation—stays intact.

• No Cost. No Risk: There’s no fee to submit your claim for review. You’ll never pay us for anything, and in many cases, the legal team only gets paid if they recover money on your behalf.

What to Do Next

If your property damage claim was delayed—even if it’s already been paid—you might still be owed penalty interest under Texas law.

Checking eligibility is fast, secure, and completely free.

Here’s how to get started:

1. Submit a claim for review using our simple screener.
   It takes just a few minutes to provide the dates, payout info, and property details.
   
   
2. We’ll review your claim to see if it meets the basic legal criteria.
   If it looks eligible, we’ll pass it along to a qualified law firm for a free legal review.
   
   
3. You choose whether to proceed.
   If the law firm determines your claim qualifies, they’ll walk you through next steps.
   There’s no pressure, no obligation — just the information you need to decide.

Don’t leave money on the table.

You did the hard part. Texas law says you shouldn’t be penalized for an insurer’s delay. Let us help you find out what you’re still owed.

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