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Texas prompt payment of claims, Insurance Code chapter 542: the statute text explained

The official text of the Texas deadlines for an insurer to acknowledge, decide and pay a first-party claim, with the surplus lines and arson exceptions.

8 min readPublished October 27, 2026Last updated October 27, 2026Edited by Joseph Budzinski, CTO, InjuryClaimGuide

The short answer

Subchapter B of Texas Insurance Code chapter 542 sets deadlines for an insurer to acknowledge, investigate, accept or reject, and pay a claim, and it applies to first-party claims: a claim under the claimant's own policy that "must be paid by the insurer directly to the insured or beneficiary" (Ins. Code §542.051). The deadlines are generally 15 days to acknowledge, 15 business days to accept or reject after final proof of loss, and five business days to pay after notice of payment, with different periods for eligible surplus lines insurers and for suspected arson (§§542.055-.057). An attorney can tell you how these rules apply to a specific situation.

This entry provides general informational guidance and is not legal advice.

Key facts (as of 2026-10-27)

  • First-party claims only. A "claim" here is made under the claimant's own policy and paid directly to the insured or beneficiary (§542.051(2)). A claim against another driver's liability insurer is not a first-party claim under that definition.
  • Notice of claim. "Notice of claim" means any written notification that reasonably apprises the insurer of the facts relating to the claim (§542.051(4)).
  • 15 days to acknowledge. Or the 30th business day for an eligible surplus lines insurer (§542.055(a)).
  • 15 business days to accept or reject. After the insurer receives all items, statements and forms required to secure final proof of loss; 30 days where the insurer has a reasonable basis to believe a loss resulted from arson (§542.056(a)-(b)).
  • Five business days to pay. After notice that the insurer will pay; the 20th business day for an eligible surplus lines insurer (§542.057).
  • Interest and fees for noncompliance. An insurer liable for a claim and not in compliance is liable for interest at 18 percent a year as damages and reasonable and necessary attorney's fees, with a different rate in an action to which Chapter 542A applies (§542.060).
  • Last amended in 2017. The history lines show §§542.051, 542.054-.057 and 542.059 unamended since added by Acts 2003, 78th Leg., ch. 1274 (eff. April 1, 2005); §§542.052 and 542.053 last amended by Acts 2007, 80th Leg., R.S., ch. 730 (H.B. 2636); §542.058 by Acts 2009, 81st Leg., R.S., ch. 833 (S.B. 1812); and §542.060 by Acts 2017, 85th Leg., R.S., ch. 151 (H.B. 1774).

What does the subchapter say?

The official text of Tex. Ins. Code §§542.055, 542.056 and 542.057, as published by the Texas Legislature:

Sec. 542.055. RECEIPT OF NOTICE OF CLAIM. (a) Not later than the 15th day or, if the insurer is an eligible surplus lines insurer, the 30th business day after the date an insurer receives notice of a claim, the insurer shall: (1) acknowledge receipt of the claim; (2) commence any investigation of the claim; and (3) request from the claimant all items, statements, and forms that the insurer reasonably believes, at that time, will be required from the claimant.

(b) An insurer may make additional requests for information if during the investigation of the claim the additional requests are necessary.

(c) If the acknowledgment of receipt of a claim is not made in writing, the insurer shall make a record of the date, manner, and content of the acknowledgment.

Sec. 542.056. NOTICE OF ACCEPTANCE OR REJECTION OF CLAIM. (a) Except as provided by Subsection (b) or (d), an insurer shall notify a claimant in writing of the acceptance or rejection of a claim not later than the 15th business day after the date the insurer receives all items, statements, and forms required by the insurer to secure final proof of loss.

(b) If an insurer has a reasonable basis to believe that a loss resulted from arson, the insurer shall notify the claimant in writing of the acceptance or rejection of the claim not later than the 30th day after the date the insurer receives all items, statements, and forms required by the insurer.

(c) If the insurer rejects the claim, the notice required by Subsection (a) or (b) must state the reasons for the rejection.

(d) If the insurer is unable to accept or reject the claim within the period specified by Subsection (a) or (b), the insurer, within that same period, shall notify the claimant of the reasons that the insurer needs additional time. The insurer shall accept or reject the claim not later than the 45th day after the date the insurer notifies a claimant under this subsection.

Sec. 542.057. PAYMENT OF CLAIM. (a) Except as otherwise provided by this section, if an insurer notifies a claimant under Section 542.056 that the insurer will pay a claim or part of a claim, the insurer shall pay the claim not later than the fifth business day after the date notice is made.

(b) If payment of the claim or part of the claim is conditioned on the performance of an act by the claimant, the insurer shall pay the claim not later than the fifth business day after the date the act is performed.

(c) If the insurer is an eligible surplus lines insurer, the insurer shall pay the claim not later than the 20th business day after the notice or the date the act is performed, as applicable.

Source: Tex. Ins. Code ch. 542, subch. B, statutes.capitol.texas.gov. Text last checked October 27, 2026.

What does it mean in plain language?

  • Three steps, three clocks. The insurer acknowledges and starts investigating after notice of the claim (§542.055), decides after it has what it needs for final proof of loss (§542.056), and pays after it says it will pay (§542.057).
  • "Business day" excludes weekends and holidays. A business day is a day other than a Saturday, Sunday or holiday recognized by Texas (§542.051(1)). The acknowledgment deadline in §542.055(a) counts days, except for eligible surplus lines insurers, which have 30 business days.
  • Surplus lines carve-outs. An eligible surplus lines insurer has until the 30th business day to acknowledge a claim and the 20th business day to pay (§§542.055(a), 542.057(c)).
  • Arson carve-out. If the insurer has a reasonable basis to believe a loss resulted from arson, it has until the 30th day to accept or reject (§542.056(b)).
  • More time, with reasons. If the insurer cannot decide within the period, it must give the claimant its reasons within that period and then decide not later than the 45th day after that notice (§542.056(d)).
  • A rejection must give reasons. A rejection notice must state the reasons for the rejection (§542.056(c)).
  • Disasters extend the deadlines. In a weather-related catastrophe or major natural disaster, as defined by the commissioner, the claim-handling deadlines are extended for an additional 15 days (§542.059(b)).

What if payment is delayed?

The official text of §542.058(a) and §542.060(a):

Sec. 542.058. DELAY IN PAYMENT OF CLAIM. (a) Except as otherwise provided, if an insurer, 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, the insurer shall pay damages and other items as provided by Section 542.060.

Sec. 542.060. LIABILITY FOR VIOLATION OF SUBCHAPTER. (a) Except as provided by Subsection (c), if an insurer that is liable for a claim under an insurance policy is not in compliance with this subchapter, the insurer is liable to pay the holder of the policy or the beneficiary making the claim under the policy, in addition to the amount of the claim, interest on the amount of the claim at the rate of 18 percent a year as damages, together with reasonable and necessary attorney's fees. Nothing in this subsection prevents the award of prejudgment interest on the amount of the claim, as provided by law.

Source: Tex. Ins. Code §§542.058, 542.060. In plain language: the 18 percent interest applies only when the insurer "is liable for a claim" and is not in compliance. Section 542.058(b) says subsection (a) does not apply where arbitration or litigation finds the claim invalid. In an action to which Chapter 542A applies, §542.060(c) sets a different interest rate.

Who is covered, and who is not?

Section 542.052 lists the insurers the subchapter applies to, including stock and mutual fire or casualty companies, county mutuals, Lloyd's plans, reciprocal exchanges and eligible surplus lines insurers. Section 542.053 says it does not apply to workers' compensation insurance, mortgage guaranty insurance, title insurance, fidelity, surety or guaranty bonds, marine insurance as defined by §1807.001, or a guaranty association created under Chapter 2602, and it limits how the subchapter applies to health maintenance organizations and certain other claims (§§542.052-.053). The subchapter "shall be liberally construed to promote the prompt payment of insurance claims" (§542.054).

When was this checked, and can it change?

The text above was last checked on October 27, 2026, against the official text published by the Texas Legislature. The Legislature can amend a statute in any session. It convenes in regular session on the second Tuesday in January of each odd-numbered year (Gov't Code §301.001), so the next regular session begins on January 12, 2027. This entry is scheduled to be rechecked against the official text by April 2027 and again after the 2027 regular session ends.

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Frequently asked questions

What kind of claim do the Texas prompt payment rules cover?
Under Tex. Ins. Code §542.051(2), a "claim" in subchapter B is a first-party claim made by an insured or policyholder, or a beneficiary named in the policy, that must be paid by the insurer directly to the insured or beneficiary.
How long does an insurer have to acknowledge a claim?
Section 542.055(a) says that not later than the 15th day, or the 30th business day for an eligible surplus lines insurer, after the insurer receives notice of a claim, it must acknowledge receipt of the claim, commence any investigation and request the items, statements and forms it reasonably believes it will need.
How long does an insurer have to accept or reject a claim?
Section 542.056(a) says not later than the 15th business day after it receives all items, statements and forms required to secure final proof of loss. If the insurer has a reasonable basis to believe a loss resulted from arson, §542.056(b) allows 30 days, and §542.056(d) allows more time if the insurer gives notice of the reasons it needs it.
Can InjuryClaimGuide tell me whether an insurer missed a deadline on my claim?
No. InjuryClaimGuide is a legal advertising service. We do not apply the law to anyone's situation and do not evaluate any claim. An attorney can advise you about your specific situation.

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