When Chapter 542A applies
Chapter 542A applies to actions on a "claim," defined as a first-party claim under a policy covering real property or improvements, paid directly to the insured, that arises from damage caused wholly or partly by forces of nature, including an earthquake or earth tremor, wildfire, flood, tornado, lightning, hurricane, hail, wind, snowstorm or rainstorm (Tex. Ins. Code § 542A.001(2)). It covers contract, negligence, misrepresentation, fraud, common-law, Chapter 541, Chapter 542 Subchapter B and DTPA claims (§ 542A.002(a)). It does not apply to actions against the Texas Windstorm Insurance Association, with a stated exception (§ 542A.002(b)).
The 61-day notice (§ 542A.003)
Not later than the 61st day before filing suit, the claimant must give written notice to the person from whom damages are sought (§ 542A.003(a)). The notice must include:
- a statement of the acts or omissions giving rise to the claim;
- the specific amount alleged to be owed on the claim for damage to or loss of covered property; and
- the amount of reasonable and necessary attorney's fees incurred, calculated from hours actually worked, as reflected in contemporaneous time records, times a customary hourly rate (§ 542A.003(b)).
If an attorney sends the notice, the attorney must give the claimant a copy and say so in the notice (§ 542A.003(c)). Notice is not required where it is impracticable, such as when there is a reasonable basis to believe there is not enough time before limitations expires, or the claim is a counterclaim (§ 542A.003(d)).
Inspection after notice (§ 542A.004)
Within 30 days after receiving the notice, the insurer may request in writing to inspect, photograph or evaluate the property. If reasonably possible, the inspection must be completed within 60 days after the insurer receives the notice.
Abatement (§ 542A.005)
If the defendant did not receive a compliant notice, or requested but was not given a reasonable opportunity to inspect, it may file a plea in abatement within 30 days after its original answer. The court must abate the case if it finds either ground, and a verified, uncontroverted plea causes automatic abatement under the conditions in the statute. Abatement continues until the later of the 60th day after a compliant notice is given or the 15th day after a requested inspection is completed (§ 542A.005(e)).
Claims against adjusters and agents (§ 542A.006)
An insurer may elect to accept whatever liability its agent, including an adjuster, might have to the claimant. Depending on timing, the claim against the agent is then dismissed with prejudice or cannot be brought.
Attorney's fees (§ 542A.007)
Chapter 542A can limit the attorney's fees a claimant recovers, using a ratio of the amount awarded on the property claim to the amount stated in the pre-suit notice. If that ratio is 0.8 or more, the full reasonable and necessary fees may be awarded; if it is less than 0.2, the court may not award fees (§ 542A.007(b)–(c)). If a required notice of the specific amount owed was not given at least 61 days before suit, fees incurred after the defendant's pleading may be barred (§ 542A.007(d)). The amount stated in the notice therefore matters.
Statute references are to the Texas Insurance Code and are summarized for general information. The full text controls. Laws change; check the current version.
