PJC Business

DTPA/I NSURANCE C ODE

PJC 102.25

R. Civ. P. 277; see Thota v. Young , 366 S.W.3d 678, 689 (Tex. 2012) (rule 277’s use of “whenever feasible” mandates broad-form submission in any or every instance in which it is capable of being accomplished). For further discussion, see PJC 116.2 regarding broad-form issues and the Casteel doctrine. Penalty for failing to comply with requirements. Except for claims made after September 1, 2017, that arise from damage or loss to real property or improvements caused by “forces of nature” like hail, hurricane, flood, wind, and earthquake, an insurer “liable for a claim” and “not in compliance” with the requirements of the stat ute 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.” Compare Tex. Ins. Code § 542.060(a) (gen eral 18 percent rule), with Tex. Ins. Code § 542.060(c) (“forces of nature” real property exception). In 2017 the legislature passed H.B. 1774 creating chapter 542A of the Texas Insurance Code for real property damage claims from “forces of nature.” As a result, insurers who violate the statute in handling those claims are instead subject to a penalty “determined . . . by adding five percent” to the judgment rate under section 304.003 of the Texas Finance Code. Tex. Ins. Code § 542.060(c). The judgment rate is the Federal Reserve Board prime rate, subject to a minimum of 5 percent (if the Fed eral Reserve Board prime rate is lower) and a maximum of 15 percent (if the Federal Reserve Board prime rate is higher). Tex. Fin. Code § 304.003(c). Finding date of notice to determine when 18 percent interest penalty begins for claims governed by section 542.060(a). The Texas Supreme Court has not decided the date that the 18 percent penalty under Tex. Ins. Code § 542.060(a) accrues, that is, the date the penalty begins to run. The Fifth Circuit has decided the issue, however, ruling that the penalty begins on the date of the violation. Cox Operating, L.L.C. v. St. Paul Surplus Lines Insurance Co. , 795 F.3d 496, 505–09 (5th Cir. 2015). Thus, if the insurer has fifteen days to comply but does not, the penalty under Tex. Ins. Code §542.060(a) accrues on the sixteenth day. If the date of compliance is disputed because the date of the insurer’s receipt of the notice of claim is disputed, the jury must determine the actual date the notice was received so that the court may then prop erly calculate the penalty. In such cases, the following question should precede PJC 102.25 and be accompanied by the definition of “notice of claim” and, if necessary, the instruction in the comment below titled “More than one ‘notice of claim’”: QUESTION ______ By what date did Don Davis receive a notice of claim from Paul Payne ? Answer with a date in the blank below. Answer: _______________

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