It's been nearly a month since Hurricane Ike cut its destructive swath through the southeast Texas communities that surround Galveston Bay. In its wake, is estimated to be as much as $18 billion or more in insured damages. The most severe damage was inflicted on coastal communities like those on Galveston Island and Bolivar peninsula. But due to the unusually large size of the storm, widespread damage was inflicted over a much larger inland region covering the entire Houston-Sugarland-Baytown metropolitan area. With an estimated population in this affected area of nearly 6 million people, it is easy to imagine how insured losses can mount very quickly.



Living and working in the Houston area has almost returned to normal again. The last people I knew of who didn't have electricity, have had their power restored for almost a week now. The portable generators are finally silenced, the long lines at gas stations are gone, and although the cleanup continues, nearly all streets are clear of debris (if you discount the piles along the curbs). For most of us, the worst of it is over. For others however, the real headaches are just beginning as insurance claims for hurricane damage are made and, in an alarming number of cases, denied.

Don't be cheated.

It's old news that some insurance companies practice systematic strategies to avoid paying full value for claims. In the wake of Hurricane Katrina, the Louisiana State Attorney General filed a lawsuit against six major insurance companies including State Farm and Allstate. According to the lawsuit, the insurance companies coerced policyholders into settling their claims for less than full value. It also alleged that they delayed payment and forced policyholders to "litigate claims to receive full value." The suit relied on information about a study conducted for Allstate by a major consulting firm that advised the insurance company to don boxing gloves and pummel anyone who didn't settle for pennies on the dollar. A book titled Good Hands to Boxing Gloves tells the story which is now yesterday's news. Or is it?

My own home suffered substantial damage from the hurricane and I'm happy to report that my own insurance provider acted quickly and in good faith to settle our homeowners insurance claim fairly. But reports of unfairly denied claims, delays in adjusting claims, and unfair settlement offers are emerging. Naturally, business owners and residents who are faced with such problems are frustrated. Fortunately, Texas law provides ample protection for policy holders from unfair insurance practices. But few policyholders are informed about their rights and the protection they have under the law.

Prompt Payment of Insurance Claims

Texas law, specifically the Prompt Payment of Claims Statute provided in the Texas Insurance Code, imposes certain deadlines for an insurance company to acknowledge, investigate, and accept or reject a claim. Policy holders may not even realize that if their insurance company fails to fulfill its duties within the prescribed deadlines, they can be liable for the full amount of the claim, plus damages including attorney's fees and an additional 18% per annum in addition to the amount of the claim.

Duties of the Insurer

The following duties are imposed on insurance companies after they receive notice of a claim:

* They must acknowledge receipt of the claim. Each separate claim requires separate acknowledgment.

* They must record the acknowledgment, making a record of the date, means, and content of the acknowledgment if it is not in writing.

* They must begin an investigation of the claim.

* They must request from the claimant all items, statements, and forms that the insurance company reasonably believes will be required from the claimant. Multiple requests may be permitted when reasonably necessary, but multiple incremental requests may in certain cases be a violation of the statute.

With a few exceptions, most insurers must perform these duties within 15 days following receipt of notice of a claim.

Additional Duties & Deadlines

Once the insurance company receives all items, statements, and forms reasonably required by them, they are obligated to fulfill the following duties:

* The insurer must notify the claimant in writing within 15 business days that it accepts or rejects the claim. There is an exception permitted if the insurer suspects arson, and the insurer can also get a 45 day extension of the deadline.

* If the insurance company rejects the claim, the rejection notice must state the reason(s) for rejection.

* If the insurance company cannot accept or reject the claim by the normal deadline, they must notify the claimant and explain why more time is needed.

* Even if the insurance company gives notice of a requirement for additional time, they must still accept or deny the claim within the additional 45 day period.

* If the claim is valid, the insurance company must pay the claim within 60 days after receiving the items requested from the claimant. This is a strict deadline and if an insurer fails to meet it, they are liable for the claimant's attorney's fees and damages of an additional 18% per annum in addition to the amount of the claim.

* The insurer must pay the claim within 5 business days after notifying the claimant that the claim will be paid.

* If the insurance company makes an act by the claimant a condition of payment, then the deadline is 5 business days after the act is performed. (Surplus lines insurers have 20 days for fulfill their obligations under either scenario.)

Get help if you need it.

Texas business and home owners have been through enough simply surviving the impact and the ensuing aftermath of Hurricane Ike. Policy holders who are experiencing difficulty due to the unfair practices of their insurers deserve better. If you have been treated unfairly by an insurance company, you may be entitled to compensation over and above the value of your insurance claim. Depending on the circumstances, not only your insurance company, but also their representatives and agents can be liable for unfair settlement practices, misrepresentations, breach of contract or other behaviors prohibited by law. Don't be bullied into accepting less than the full value of your hurricane damage insurance claim. Get help if you need it from a qualified attorney with experience handling first party insurance claims litigation.