A federal judge in Victoria recently upheld the general rule that prompt payment of an appraisal award ends a coverage/bad faith lawsuit in its entirety and will result in dismissal of any attempts to continue litigating against the insurer.  In Gonzales v. Allstate Vehicle & Prop. Ins. Co., 6:18-CV-26, 2019 WL 699137 (S.D. Tex. Feb. 19, 2019) (slip op.), a homeowner sued Allstate, alleging she was underpaid for damages caused by Hurricane Harvey.  After appraisal was invoked and completed, Allstate paid the appraisal award after applying the deductible.

The homeowner did not challenge the award, but alleged Allstate had violated the Prompt Payment of Claims Act (Tex. Ins. Code Chapter 542) by not paying within 5 business days after the award was issued, a gambit designed to open the door to a claim for attorney fees. The court found that any delay in payment was of no consequence and the homeowner had not presented any evidence of damages resulting from a delay. Nor had the homeowner asserted or proven that she had any damages independent of her right to receive policy benefits, as required under Menchaca to maintain an extra-contractual cause of action.

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