PJC Business

PJC 102.27

DTPA/I NSURANCE C ODE

the policy, in addition to the amount of the claim, interest on the amount of the claim at the rate of 18 percent a year as damages.” Compare Tex. Ins. Code § 542.060(a) (gen eral 18 percent rule), with Tex. Ins. Code § 542.060(c) (“forces of nature” real property exception). In 2017 the legislature passed H.B. 1774 creating chapter 542A of the Texas Insurance Code for real property damage claims from “forces of nature.” As a result, insurers who violate the statute in handling those claims are instead subject to a penalty “determined . . . by adding five percent” to the judgment rate under section 304.003 of the Texas Finance Code. Tex. Ins. Code § 542.060(c). The judgment rate is the Federal Reserve Board prime rate, subject to a minimum of 5 percent (if the Fed eral Reserve Board prime rate is lower) and a maximum of 15 percent (if the Federal Reserve Board prime rate is higher). Tex. Fin. Code § 304.003(c). Finding date of insurer’s notice that it would pay all or part of claim to deter mine when 18 percent interest penalty begins for claims governed by section 542.060(a). The Texas Supreme Court has not decided the date that the 18 percent penalty under Tex. Ins. Code § 542.060(a) accrues, that is, the date the penalty begins to run. The Fifth Circuit has decided the issue, however, ruling that the penalty begins on the date of the violation. Cox Operating, L.L.C. v. St. Paul Surplus Lines Insurance Co. , 795 F.3d 496, 505–09 (5th Cir. 2015). Thus, if the insurer has five “business days” to comply but does not, the penalty under Tex. Ins. Code §542.060(a) accrues on the sixth “business day.” If the date of the insurer’s notice to the claimant is dis puted, the jury must determine the actual date of the notice so that the court may then properly calculate the penalty. In such cases, the following question should precede PJC 102.27: QUESTION ______ By what date did Don Davis notify Paul Payne in writing that Don Davis would pay all or part of Paul Payne ’s claim? Answer with a date in the blank below. Answer: _______________ Finding “the date the claim was required to be paid” to determine when inter est penalty begins on “forces of nature” real property claims governed by section 542.060(c). The interest penalty for violations in handling claims for damage to real property and improvements caused by “forces of nature” begins “on the date the claim was required to be paid.” Tex. Ins. Code § 542.060(c). Under section 542.057 the claim is “required to be paid” within five days of the insurer’s written notification of its willingness to do so. If the date of the insurer’s written notification is disputed, the question in the preceding comment asking the date should be submitted. Determining if insurer is “liable for a claim under an insurance policy.” To be liable for breach of any of the duties imposed by the Prompt Payment of Claims

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