“Act of God floating rate” is shorthand for one sentence in the Texas Insurance Code: the interest rate on late-paid weather insurance claims under §542.060(c). It isn’t about loans or force-majeure clauses. It decides how much a Texas insurer owes when it pays a hail, wind, hurricane or flood claim late.
In short
- Formula: Finance Code §304.003 judgment rate + 5%, simple interest.
- Today: 7.00% (November 2026) + 5% = 12.00%.
- Range: 10% to 20%, because §304.003 has a 5% floor and 15% ceiling.
- Applies to: forces-of-nature claims made on or after September 1, 2017, in actions governed by Chapter 542A.
Where the floating rate comes from
Until 2017, every late-paid Texas claim carried 18%. House Bill 1774 (85th Legislature), effective September 1, 2017, added Chapter 542A for weather-related property claims and added subsection (c) to §542.060:
“In an action to which Chapter 542A applies, if an insurer that is liable for a claim under an insurance policy is not in compliance with this subchapter, the insurer is liable to pay the holder of the policy, in addition to the amount of the claim, simple interest on the amount of the claim as damages each year at the rate determined on the date of judgment by adding five percent to the interest rate determined under Section 304.003, Finance Code, together with reasonable and necessary attorney’s fees.”
Tex. Ins. Code §542.060(c)
The subsection adds that interest “accrues beginning on the date the claim was required to be paid.”
Which claims are “Act of God” claims?
Chapter 542A defines its claims as first-party claims under a policy covering real property or improvements, paid directly to the insured, arising from damage “caused, wholly or partly, by forces of nature, including an earthquake or earth tremor, a wildfire, a flood, a tornado, lightning, a hurricane, hail, wind, a snowstorm, or a rainstorm” (§542A.001(2)). Note “wholly or partly” — a loss with a mixed cause can qualify. The list is not exhaustive (“including”); freeze damage, for example, isn’t named, and whether a particular loss qualifies can be disputed.
Chapter 542A does not apply to actions against the Texas Windstorm Insurance Association (§542A.002(b)), which has its own remedies.
The September 1, 2017 cutoff: date of claim, not date of loss
HB 1774’s transition section is specific. Chapter 542A applies to actions filed on or after September 1, 2017, and “Section 542.060(c) … applies only to a claim … made on or after the effective date of this Act” (HB 1774, §4). So a weather claim made before that date keeps the 18% rate, even if the dispute was litigated later. For a storm that hit in August 2017 but was reported in September, the floating rate would apply.
How the rate is set
The §304.003 rate is set monthly by the Texas Office of Consumer Credit Commissioner: on the 15th, it takes the prime rate published by the Federal Reserve Board, floored at 5% and capped at 15%, and that becomes the rate for judgments rendered the following month. Selected months:
| Month | §304.003 rate | §542.060(c) rate |
|---|---|---|
| September 2017 | 5.00% | 10.00% |
| November 2018 | 5.25% | 10.25% |
| February 2019 | 5.50% | 10.50% |
| November 2019 | 5.00% | 10.00% |
| September 2022 | 5.50% | 10.50% |
| December 2022 | 7.00% | 12.00% |
| May 2023 | 8.00% | 13.00% |
| September 2023 | 8.50% | 13.50% |
| November 2024 | 8.00% | 13.00% |
| February 2025 | 7.50% | 12.50% |
| December 2025 | 7.00% | 12.00% |
| January 2026 | 6.75% | 11.75% |
| November 2026 | 7.00% | 12.00% |
The full table is on our Texas judgment interest rate page.
“Determined on the date of judgment”
In a lawsuit, one rate — the rate in effect on the date the judgment is signed — applies to the entire period of delay. It is not averaged across the months the claim sat unpaid. Before judgment, a demand or settlement uses the current month’s rate as the best estimate.
18% versus the floating rate: what it means in dollars
| Late amount & delay | At 18% | At 12.00% |
|---|---|---|
| $25,000 × 90 days | $1,109.59 | $739.73 |
| $50,000 × 180 days | $4,438.36 | $2,958.90 |
| $100,000 × 1 year | $18,000.00 | $12,000.00 |
| $176,000 × 423 days | $36,714.08 | $24,476.05 |
Why Texas moved to a floating rate
When HB 1774 was debated, Texas was coming off a wave of hail litigation, and market interest rates had been near zero for years. Supporters, including insurers and tort-reform groups, argued that a fixed 18% had drifted far above market rates and encouraged weather-claim lawsuits; tying the penalty to the judgment rate, they said, would keep it meaningful without being a windfall. Opponents, including consumer advocates, argued that a lower penalty would weaken insurers’ incentive to pay storm claims promptly. The compromise kept a penalty at least five points above the judgment rate, with a 10% floor.
What the floating rate didn’t change
- The deadlines in §§542.055–.058 are the same for weather claims.
- Interest still accrues from the date payment was required, and it is still simple interest.
- Partial payments and appraisal awards are treated the same way (Hinojos, Barbara Technologies).
- Attorney’s fees remain available, but subject to Chapter 542A’s notice and fee formula.
Frequently asked questions
What is the current Texas Act of God floating rate?
12.00%: the November 2026 §304.003 rate of 7.00% plus 5%.
Does the floating rate apply to freeze claims?
Freeze isn’t in §542A.001’s list of examples (snowstorm is). Whether a freeze loss is a forces-of-nature claim can be argued either way and affects both the rate and the pre-suit notice requirement.
Can the floating rate be higher than 18%?
Yes, in principle: if prime were above 13%, §304.003 plus 5% would exceed 18%, up to a 20% maximum.
Is the floating rate set when the claim is late or at judgment?
At judgment. §542.060(c) uses the rate “determined on the date of judgment.”