Prompt Payment of Claims Act

Barbara Technologies v. State Farm

Raizner Slania led the fight to force the insurance industry to bear the cost of delay in the appraisal process.

Barbara Technologies is a Texas Supreme Court case from 2019 where we represented the plaintiff. The Court’s decision overruled more than a decade’s worth of law in Texas, which previously held the payment of an appraisal award prevented the insured from pursuing interest owed under the Texas Prompt Payment of Claims Act.

Previously, when an insurance company paid an appraisal award – no matter how long after a claim was filed, and no matter what the insurance company did to cause delays – the policyholder could not obtain the interest owed under the Act.

Barbara Technologies changed this, bringing Texas in line with the prevailing United States rule that an insurer must pay for its delay.

The Texas Prompt Payment of Claims Act under Section 542 of the Texas Insurance Code:

This law requires insurance companies to pay interest, in addition to the amount of the insurance claim, when an insurance company delays payment of a claim longer than the statute’s imposed deadlines for making a claims decision.

The deadline to pay can be as short as 75 days. If an insurer delays longer, it can potentially be liable for interest, ranging from 10.00% to 18.00%.

Interest amounts potentially owed by the insurer: 

If you gave notice of the claim prior to September 1, 2017, an insurer can be liable for interest at rates of 18.00% simple interest per year.

And even if you have a more recent claim, the interest rate the insurance company owes on the appraisal usually ranges between 10.00% and 11.00%.

The rules on the payment of interest are clear – and it can add up – and Raizner Slania has been on the cutting edge of ensuring insurance companies always bear the cost of delay.

What else can you recover after an appraisal? 

Large appraisal awards can be tricky and often include amounts that an insurer company must pay later, usually after repair work is completed. In some cases, an insurer may hold back the payment of depreciation – meaning the difference between today’s market value versus the full replacement cost – until repairs are completed.

Insurers also hold back the payment of costs required to bring an older building up to current building codes. In some cases, an insurer may simply decide it doesn’t want to pay the award, and will claim it gets a discount or offset for items pre-existing damage, wear and tear, manufacturing defects, faulty installation and other items it claims were not caused by the loss.

Like interest, these hold backs can add up, and when an insurance company unreasonably delays or refuses to pay the full award, Raizner Slania can help.