Texas Insurance Code § 542.051 – Key Definitions in Prompt Payment Law
Table of Contents
Statutory Text:
Sec. 542.051. DEFINITIONS.
In this subchapter:
(1) “Business day” means a day other than a Saturday, Sunday, or holiday recognized by this state.
(2) “Claim” means a first-party claim that:
(A) is made by an insured or policyholder under an insurance policy or contract that provides benefits for:
(i) loss of or damage to real or personal property; or
(ii) the loss of use of real or personal property; and
(B) arises out of the occurrence of the contingency or loss covered by the policy or contract.(3) “Claimant” means a person making a claim.
(4) “Notice of claim” means any written notification provided by a claimant to an insurer that reasonably apprises the insurer of the facts relating to the claim.
What Does This Law Mean for Injury Victims?
Texas’s Prompt Payment of Claims Act starts with § 542.051, which defines how and when a valid insurance claim clock begins ticking. This statute is especially important for injured parties filing claims for:
Uninsured/underinsured motorist (UIM) benefits
Personal injury protection (PIP)
MedPay coverage
Property damage to a vehicle after an accident
Once a written claim notice is submitted under these definitions, insurers must comply with strict deadlines under §§ 542.056–542.058.
Example Scenario
You are hit by a drunk driver who flees the scene. You file a written claim with your insurer under your uninsured motorist coverage. That document qualifies as a “notice of claim” under § 542.051(4), which triggers the insurer’s 15-day response obligation under § 542.056.
When This Law Applies
This law applies to first-party claims, meaning:
The injured person is making a claim against their own insurance policy
The claim is for covered losses, such as injury expenses or vehicle repairs
The insurer must respond promptly and process the claim in good faith
It does not apply to third-party liability claims against another person’s insurer. But most injured clients are unaware they may have claims under their own coverage as well.
Related Statutes
- § 542.056 – Insurer’s Duty to Accept or Reject Within 15 Days
- § 542.058 – Penalty for Delayed Payment
- § 542.003 – Unfair Claim Practices
- § 541.060 – Bad Faith Settlement Handling
- § 1952.101 – UIM Coverage Requirements
Texas Case Law Interpreting § 541.060
Court found that once a written claim is submitted, the insurer’s clock to respond begins running under the prompt payment statute.
Clarified that “notice of claim” includes any document reasonably notifying the insurer of the loss.
Stated that delay penalties are tied to the definitions and notice requirements of § 542.051.
Frequently Asked Questions About § 542.051
Houston Personal Injury Lawyer - Joel A. Gordon
Yes. It applies to first-party injury and property damage claims, including PIP, MedPay, and UIM.
Any written communication that reasonably alerts the insurer about your loss and starts their legal deadlines.
No. It only applies to claims made against your own insurance (first-party coverage).
The insurer must acknowledge the claim and respond within 15 business days under § 542.056.