Answer: Under Texas Insurance Code §542.060, if an insurer is liable for a claim and is not in compliance with Chapter 542, Subchapter B (Prompt Payment of Claims), it owes the policyholder interest on the amount of the claim at 18 percent a year as damages, together with reasonable and necessary attorney’s fees. Read the current statute on the Texas Legislature site. This page is documentation for a Houston restoration file — not legal advice.
Related: date of loss vs discovery, created-opening / wind-driven rain, and who pays drying electricity. Coverage decisions stay between you and your adjuster.
§542.055 generally requires acknowledgment and a request for items within 15 days after notice of the claim. §542.056 generally requires written acceptance or rejection within 15 business days after the insurer receives all required items (longer windows apply in stated cases). §542.057 generally requires payment within five business days after notice that the claim will be paid. Miss those Subchapter B duties and later be found liable, and §542.060 is the interest statute.
Days in the acknowledgment and determination sections are the business-day windows in the Code. Interest, once it applies, is commonly computed as simple annual interest: (unpaid amount × 0.18 ÷ 365) × calendar days late. Courts decide the unpaid amount. We do not invent a Houston miss-rate.
For claims that Chapter 542A covers, the prejudgment interest formula is not automatically the flat 18%. 542A uses a statutory formula tied to the prime rate, capped at 18%. Confirm whether 542A notice and claim-type rules apply before quoting 18% on a hail or wind file.
Interest attaches to the amount the insurer was liable for and withheld past the statutory deadline — not automatically to a contractor’s full RCV wish list. Partial timely payment leaves interest, if any, on the unpaid difference.
Twins of this math (“calculating statutory interest,” “18% formula,” “TPPCA 18% penalty math”) should 301 here. §542.056 15-day rule stays on its own slug.
Water in the house now: Houston water damage restoration · (281) 262-9500
