Texas puts your insurer on a clock. Under the Texas Prompt Payment of Claims Act (Insurance Code Chapter 542, Subchapter B), your insurer generally must acknowledge your claim and begin investigating within 15 days, accept or reject it in writing by the 15th business day after it has the information it needs, and pay an accepted claim within 5 business days. Miss those deadlines and it can owe penalty interest plus your attorney’s fees. One critical caveat: weather and storm claims are governed by a separate law, Chapter 542A, which changed the penalty math — so the familiar “18%” figure does not apply cleanly to hail or wind losses.
The core deadlines under the Prompt Payment Act
The Prompt Payment of Claims Act sets three response deadlines for the insurer once you file a first-party property claim. Here they are, with the statute for each.
| Stage | Deadline | Statute |
|---|---|---|
| Acknowledge claim & begin investigation | 15 days after receiving notice of claim | §542.055 |
| Accept or reject the claim in writing | By the 15th business day after receiving the items needed (may extend up to 45 more days with written explanation) | §542.056 |
| Pay an accepted claim | Within 5 business days of notifying you it will pay | §542.057 |
These deadlines run from when the insurer has what it reasonably needs to evaluate your claim, so responding quickly to requests for documents keeps your own clock clean.
It helps to see these as three distinct clocks rather than one countdown. The first clock (§542.055) starts the moment you give notice of a claim — the insurer has to acknowledge it, commit to investigating, and ask you for the documents it needs. The second clock (§542.056) is the decision clock: once the insurer has your information, it must tell you in writing whether it’s paying, denying, or paying in part, generally by the 15th business day, with a limited extension of up to 45 more days if it gives you a written reason. The third clock (§542.057) is the payment clock: after it says “yes,” the money must follow within 5 business days. Knowing which clock you’re waiting on tells you which deadline the insurer is actually up against.
Why the deadlines exist
The Prompt Payment of Claims Act exists to stop a specific tactic: an insurer sitting on a valid claim, hoping the policyholder gives up, runs out of money, or accepts a lowball offer out of desperation. By attaching a real financial penalty — extra interest and attorney’s fees — to unjustified delay, the law changes the incentive. A slow-walked claim can cost the insurer more than a promptly paid one. That’s the leverage the statute hands you, and it’s why documenting your dates matters so much: the penalty only bites if you can show exactly when the insurer received what it needed and how long it then took.
The late-payment penalty — and the big weather-claim caveat
If the insurer is liable for the claim and does not pay within the statutory window, §542.060 makes it liable for the claim amount plus 18% annual interest as damages, plus reasonable attorney’s fees. That 18% figure is the number most Texans have heard about.
Here is the caveat that trips people up. In 2017, the Legislature passed HB 1774, creating Chapter 542A for claims “arising from forces of nature” — hail, windstorm, rain, hurricanes, and similar weather events. For those claims, effective September 1, 2017, the flat 18% penalty was replaced by a variable rate: interest is tied to a formula (the judgment interest rate plus a margin), with a floor and a cap rather than a fixed 18%.
What this means in plain terms:
- If your loss is a non-weather event (say, a burst pipe or a kitchen fire), the classic Chapter 542 timeline and the 18% penalty framework generally apply.
- If your loss is a weather or storm event — the most common kind of large Texas homeowner claim — Chapter 542A governs, the penalty interest is not a flat 18%, and there are extra notice and process requirements before you can sue.
Anyone telling you “Texas pays 18% on late storm claims” is oversimplifying a law that specifically changed for storm claims. Confirm which chapter applies to your loss before relying on any interest figure.
A quick side-by-side makes the split clearer:
| Feature | Chapter 542 (non-weather) | Chapter 542A (weather/storm) |
|---|---|---|
| Typical covered loss | Burst pipe, kitchen fire, theft | Hail, wind, hurricane, rain |
| Late-payment interest | 18% per year (§542.060) | Variable rate with a floor and cap — not a flat 18% |
| Pre-suit notice | Not required by 542A | Written pre-suit notice and inspection opportunity required |
| Effective since | Long-standing | September 1, 2017 (HB 1774) |
Extra steps Chapter 542A adds for storm claims
Chapter 542A did more than change the interest rate. For weather-related claims it also added pre-suit steps, including a written notice you must give the insurer before filing a lawsuit and an opportunity for the insurer to inspect. These procedural hurdles are a real part of the timeline for storm losses. If you are dealing with hail or wind damage and considering legal action, this is exactly the point to get professional advice.
What to do to protect your deadlines
- Report the loss promptly and in writing. Your policy almost always requires prompt notice, and it starts the insurer’s clock.
- Keep a dated paper trail. Note when you filed, when the insurer acknowledged, and every request it makes. The statutory deadlines hinge on these dates.
- Respond fast to document requests. The accept/reject clock in §542.056 runs from when the insurer has what it needs, so don’t hand it a reason to pause the timeline.
- Identify the cause of loss early. Whether your claim is “weather” or “non-weather” decides whether Chapter 542 or 542A governs — and that changes both the process and the penalty math.
- Get help on storm claims. A public adjuster can document a storm loss, and if you suspect the insurer is stalling or lowballing, understanding bad faith matters.
When the timeline breaks down
If your insurer blows through these deadlines without a valid reason, that delay can itself be evidence of unfair claim handling. A missed statutory deadline doesn’t automatically mean bad faith, but unreasonable delay is one of the classic markers regulators and courts look at. If your claim was underpaid or denied, start with the process for a denied home insurance claim, and know when it’s time to escalate.
A few practical signs that a claim is being mishandled rather than just processed carefully: the insurer never sends a written acknowledgment, it repeatedly asks for the same documents to reset its clock, it lets the extension period lapse without a decision, or it accepts the claim and then still doesn’t pay within the 5-business-day window. None of these alone proves a violation, but together they build a record — and a clear, dated record is exactly what turns “the insurer was slow” into “the insurer missed a statutory deadline.” Keep copies of every letter, email, and estimate, and note the date on each. If you ultimately need to involve the Texas Department of Insurance or an attorney, that timeline is the first thing they’ll ask for.
Laws and interest rates in this area change, and the weather-claim rules in particular have shifted in recent years. This is general information, not legal advice. Confirm the current statute and any deadline that applies to your situation with the Texas Department of Insurance or a licensed Texas attorney before you act.