Penalties for Insurer Noncompliance
When Insurance Companies Do Not Act in Good Faith
Insurers have to abide by certain rules when it comes to serving their clients. In essence, insurers are required to respond within a “reasonable amount of time” to insurance claims. For Texas, this window is exactly 15 days, so for the other states “reasonable” may mean within a month at the most. Insurers are also required to “deal in good faith,” providing honest processes and payment to clients.
Payment for claims that include proof of loss must be disbursed within two to three months, or the insurance company must provide official, honest explanation as to why payment is delayed or denied. Because the stakes of economic, physical, and mental health are at stake in health and accident claims, state law protects clients from fraudulent or negligent insurance companies through strict punishments and legal liability.