In March 2021 the Texas Supreme Court decided Hinojos v. State Farm Lloyds, 619 S.W.3d 651. It answered a question that comes up in almost every disputed property claim: if an insurer pays something on time, and more is owed later, is the insurer liable for prompt-payment interest on the rest?
The holding in one sentence
An insurer is liable under the Texas Prompt Payment of Claims Act for amounts it owed but had not paid when the statutory deadline expired — even if it made a reasonable payment within the deadline and later paid the rest through appraisal.
Background: appraisal and the prompt-payment statute
Most Texas property policies contain an appraisal clause: if the insurer and policyholder disagree on the amount of loss, each appoints an appraiser, the appraisers choose an umpire, and an agreed or umpire-approved figure becomes binding on the amount. For years, insurers argued that paying an appraisal award ended the claim — including any claim that payment was late.
In 2019 the Supreme Court began rejecting that argument:
- Barbara Technologies Corp. v. State Farm Lloyds, 589 S.W.3d 806 (Tex. 2019): paying an appraisal award is neither an acknowledgment of liability nor a determination that the insurer complied with the statute; it does not, by itself, bar TPPCA damages.
- Ortiz v. State Farm Lloyds, 589 S.W.3d 127 (Tex. 2019): paying the award generally forecloses breach-of-contract and bad-faith claims for policy benefits (absent an independent injury) — but not the TPPCA claim.
- Alvarez v. State Farm Lloyds, 601 S.W.3d 781 (Tex. 2020): applied Barbara Technologies.
What happened in Hinojos
Hinojos made a wind and hail claim. State Farm investigated and paid an amount within the statutory period; Hinojos disputed it and invoked appraisal; the award was higher, and State Farm paid it. Hinojos sued under the TPPCA for interest on the late-paid amount. The court of appeals sided with State Farm, reasoning that State Farm had made a reasonable payment on the claim within the sixty-day statutory limit. The Supreme Court reversed and sent the case back.
The Court’s reasoning
The statute’s text drove the result. §542.058 makes an insurer that “delays payment of the claim” for more than the allowed period liable under §542.060. The “claim” is the amount the insurer is liable for under the policy — not the amount the insurer chose to pay. So if the insurer was liable for more than it paid by the deadline, it delayed payment of part of the claim. A good-faith, reasonable estimate doesn’t change that, because §542.058 is a timing statute, and the Act must be “liberally construed to promote the prompt payment of insurance claims” (§542.054). Interest is measured on the amount owed but unpaid when the deadline passed.
What Hinojos means in practice
- Partial payments don’t end the analysis. They reduce the unpaid balance from the date paid.
- The appraisal award is evidence of what was owed. The difference between the award (less deductible) and what was paid by the deadline is the starting balance for interest.
- The deadline still has to be proved. Hinojos doesn’t say when the 60 days started. That still depends on when the insurer received the items it reasonably requested — a fact question.
- It applies to weather claims. For Chapter 542A claims the rate is the §542.060(c) floating rate (12.00% using the November 2026 rate), but the principle is the same.
Example
Deadline: May 21, 2024. Paid by then: $48,000. Award less deductible: $224,000. The $176,000 balance is paid July 18, 2025 — 423 days later. At 12.00%: $24,476.05. At 18%: $36,714.08.
After Hinojos: Rodriguez v. Safeco (2024)
Insurers adapted. In Rodriguez v. Safeco Insurance Co. of Indiana (Tex. Feb. 2, 2024), the Court answered a certified question from the Fifth Circuit: in a Chapter 542A case, when the insurer pays the appraisal award plus any statutory interest that could be owed, the insured can’t recover attorney’s fees under §542A.007, because nothing remains to be awarded on the claim. The practical result is that many carriers now pay an interest figure with the award. Hinojos tells you interest is owed; Rodriguez makes it essential to check whether what was paid was enough — the right start date, the right rate, every payment credited on the right day.
The appraisal interest calculator has a field for the interest the carrier already paid and shows any shortfall.
Frequently asked questions
What is the citation for Hinojos?
Hinojos v. State Farm Lloyds, 619 S.W.3d 651 (Tex. 2021).
Does Hinojos apply if the insurer paid within 60 days?
Yes — that was the point of the case. A timely, reasonable partial payment doesn’t protect the insurer from liability on amounts it owed but hadn’t paid by the deadline.
Did Hinojos change the 60-day trigger?
No. When the deadline started is still determined by when the insurer received the items it reasonably requested.