Texas Supreme Court Revives State Farm Customer’s Lawsuit

Posted on Friday, March 26, 2021

Last Friday, the Texas Supreme court ruled that State Farm did not provide prompt payment for Provost Umphrey client, Louis Hinojos, after he filed a claim for storm damage to his El Paso home. This subjected State Farm to legal action under the Texas Prompt Payment of Claims Act.

The Texas Prompt Payment of Claims Act (TPPCA) incentivizes insurers to complete appraisals and pay policyholders within 60 days of filing their claim. If insurers go beyond the 60-day deadline, they are subject to pay 18% in interest fees and the policyholder’s attorney fees if legal action is pursued.

State Farm argued making partial payment to Mr. Hinojos within the 60-day window in 2013, barred them from the TPPCA. Texas Justices rejected this notion saying the TPPCA is in place to encourage insurers to “resolve disputes and invoke appraisal process sooner rather than later” and nothing in the statute’s language protects the insurer from liability based on a partial payment.

In this case, State Farm did not implement an appraisal of Mr. Hinojos’ loss until over two years after he filed. State Farm initially paid Mr. Hinojos under $2,000 for his claim while appraisers, 2 ½ years later, assessed the damages at $38,269.95.

Associate Justice Jane Bland delivered her opinion stating, “A significant delay in requesting an appraisal, as in this case, may cause additional interest to accrue.” In Mr. Hinojos’ case, an award of 18% interest and attorneys’ fees are applicable under the TPPCA.

“Insurance companies cannot believe they are at liberty to pay small portions of a policyholder’s claims, then legally sit on the claim for years without completing the payment,” says Provost Umphrey’s Dave Wilson, one of the lawyers representing Mr. Hinojos. “I am very pleased the highest court in Texas agreed that this kind of behavior is unlawful and subject to legal action.”

If your claim has not been promptly paid by your insurance company, you may be eligible to take legal action. Our lawyers have extensive knowledge and experience in standing up to big insurance companies dodging payments for their policyholders. Call us today for a risk-free case evaluation and we’ll get started working for you. Follow these tips on how to effectively file a claim. 

Mr. Hinojos is represented by Sharon McCally of McCally Law PC, Andrew B. Bender of The Bender Law Firm PLLC, Chad T. Wilson of The Chad T. Wilson Law Firm PLLC and David P. Wilson of Provost Umphrey Law Firm LLP.

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