Key takeaways
- The Texas Prompt Payment of Claims Act is Chapter 542, Subchapter B of the Texas Insurance Code (§§542.051–.061).
- It sets deadlines to acknowledge (15 days), decide (15 business days), pay after acceptance (5 business days) and pay in any event (60 days after receiving requested items).
- An insurer that is liable for a claim and misses a deadline owes interest as damages — 18% a year, or 12.00% for weather claims under §542.060(c) — plus reasonable attorney’s fees.
- The statute must be “liberally construed to promote the prompt payment of insurance claims” (§542.054).
What the Texas Prompt Payment Act is
Texas first passed a prompt-payment law for insurance claims in 1991, as Article 21.55 of the old Insurance Code. When the Legislature recodified the Insurance Code, Article 21.55 became Chapter 542, Subchapter B (“Prompt Payment of Claims”), effective April 1, 2005. Lawyers still call it the TPPCA or simply “542.” Its purpose is written into the statute: it “shall be liberally construed to promote the prompt payment of insurance claims” (§542.054).
The Act does two things. It imposes a sequence of claim-handling deadlines on insurers, and it attaches a financial consequence to missing them. That consequence — statutory interest “as damages” plus attorney’s fees — is what Enforce Interest calculates and presents for Texas policyholders.
Who and what it covers
Subchapter B applies to essentially every insurer authorized to do business in Texas (§542.052): stock and mutual companies, Lloyd’s plans, reciprocal exchanges, county and farm mutuals, risk retention and purchasing groups, eligible surplus lines insurers and others. It covers a “claim” as defined in §542.051: a first-party claim made by an insured, policyholder or named beneficiary that must be paid by the insurer directly to that person. Homeowners, commercial property, renters, condo and many other first-party claims qualify.
It does not apply to (§542.053):
- workers’ compensation insurance;
- mortgage guaranty insurance;
- title insurance;
- fidelity, surety or guaranty bonds;
- marine insurance as defined in §1807.001; or
- the Texas Title Insurance Guaranty Association.
The Texas Property and Casualty Insurance Guaranty Association is covered by the deadlines but is not subject to the §542.060 damages. Claims against the Texas Windstorm Insurance Association follow TWIA’s own exclusive remedies in Chapter 2210 (see our hurricane claims guide).
The deadlines, section by section
| Section | Insurer must… | Deadline |
|---|---|---|
| §542.055 | Acknowledge the claim, begin investigating and request all items it reasonably believes it will need | 15 days after notice (surplus lines: 30 business days) |
| §542.056(a) | Accept or reject the claim in writing | 15 business days after receiving all items required to secure final proof of loss |
| §542.056(b) | Same, when it reasonably suspects arson | 30 days after receiving the items |
| §542.056(d) | If it can’t decide, say why it needs more time — then decide | Within the original window; then within 45 days of that notice |
| §542.057 | Pay the claim (or the accepted part) after notifying acceptance | 5 business days (surplus lines: 20 business days) |
| §542.058 | Not delay payment | 60 days after receiving all items reasonably requested, unless another statute sets a period |
| §542.059(b) | — | All claim-handling deadlines +15 days in a commissioner-declared weather catastrophe |
A “business day” is any day except Saturday, Sunday or a holiday recognized by Texas (§542.051(1)). The claim deadline calculator applies those rules to your dates.
§542.055: acknowledgment and the first request
The first deadline is triggered by “notice of claim” — any written notification that reasonably apprises the insurer of the facts of the claim. Within 15 days the insurer must acknowledge receipt (and if it does so orally, keep a record of the date, manner and content), start its investigation, and request from the claimant “all items, statements, and forms that the insurer reasonably believes, at that time, will be required.” It may make additional requests later only “if during the investigation of the claim the additional requests are necessary” (§542.055(b)).
§542.056: the decision
Once the insurer has the items it required to secure final proof of loss, it has 15 business days to accept or reject the claim in writing. A rejection must give reasons. If the insurer can’t decide in time, it must tell the claimant why within the same period, and it then has 45 days from that notice to decide.
§542.057: payment after acceptance
If the insurer accepts all or part of the claim, it must pay within 5 business days of the notice of acceptance, or within 5 business days after the claimant performs any act the payment was conditioned on (for example, returning a signed proof of loss).
§542.058: the 60-day rule
§542.058 is the backstop. An insurer that, “after receiving all items, statements, and forms reasonably requested and required under Section 542.055, delays payment of the claim for a period exceeding the period specified by other applicable statutes or, if other statutes do not specify a period, for more than 60 days,” must pay the damages in §542.060. It does not apply if arbitration or litigation finds the claim invalid (§542.058(b)).
The penalty: §542.060 interest and attorney’s fees
If an insurer “that is liable for a claim under an insurance policy is not in compliance with this subchapter,” it must pay, in addition to the claim, interest on the amount of the claim at 18% a year as damages, together with reasonable and necessary attorney’s fees (§542.060(a)). If suit is filed, the fees are taxed as costs (§542.060(b)).
For actions governed by Chapter 542A — weather and other forces-of-nature claims made on or after September 1, 2017 — the rate is instead simple interest at the §304.003 judgment rate on the date of judgment plus 5%, accruing from the date the claim was required to be paid (§542.060(c)). For November 2026, that is 7.00% + 5% = 12.00%. Both subsections preserve prejudgment interest “as provided by law,” and §542.061 makes the Act’s remedies cumulative with any other remedy.
Interest is owed when the insurer (1) is liable for the claim and (2) failed to comply with the subchapter. A late payment of a claim the insurer was never liable for doesn’t trigger it; neither does a timely payment of a claim it was liable for.
How Chapter 542A changed weather claims in 2017
HB 1774 added Chapter 542A, effective September 1, 2017, for claims arising from damage caused wholly or partly by forces of nature. It requires a written pre-suit notice at least 61 days before filing (§542A.003), gives the insurer a right to inspect (§542A.004), lets the insurer abate a suit filed without proper notice (§542A.005) and ties attorney’s fees to how close the judgment comes to the amount demanded in the notice (§542A.007). It also created the floating rate in §542.060(c). See the 542A pre-suit notice guide.
The cases that shape it today
- Barbara Technologies Corp. v. State Farm Lloyds, 589 S.W.3d 806 (Tex. 2019) — payment of an appraisal award is not an acknowledgment of liability and does not, as a matter of law, bar TPPCA damages.
- Ortiz v. State Farm Lloyds, 589 S.W.3d 127 (Tex. 2019) — decided the same day: paying an appraisal award forecloses breach-of-contract and bad-faith claims for policy benefits absent an independent injury, but the TPPCA claim could proceed.
- Alvarez v. State Farm Lloyds, 601 S.W.3d 781 (Tex. 2020) — applied Barbara Technologies.
- Hinojos v. State Farm Lloyds, 619 S.W.3d 651 (Tex. 2021) — an insurer is liable under the TPPCA for amounts owed but unpaid when the statutory deadline expires, even if it made a reasonable partial payment on time.
- Rodriguez v. Safeco Ins. Co. of Indiana (Tex. 2024) — in a Chapter 542A case, an insurer that pays the appraisal award plus all statutory interest that could be owed is not liable for attorney’s fees under §542A.007.
Read more in Hinojos v. State Farm Lloyds, explained.
How to use the Act on your own claim
- Write everything down. The date you gave written notice, every request the insurer made and the date it received each response. The claim timeline builder keeps this for you.
- Find the trigger date. The 60-day clock starts on the date the insurer had everything it reasonably requested — not necessarily the date it says the file was complete.
- Compare payments to deadlines. Any amount paid after its deadline, including amounts later found owed through appraisal or a supplement, can carry interest.
- Run the numbers. Use the statutory interest calculator with the right rate.
- Present it. A clear, dated timeline with the calculation is often enough for a carrier to resolve the issue. Enforce Interest does this as part of a public adjusting engagement; disputes that require a lawsuit belong with a Texas attorney.