Property Insurance Claim Denial Guide – McKinney, Texas

Introduction: Why Claim Denials Matter to McKinney Homeowners

McKinney sits in Collin County, part of the North Texas region that regularly experiences severe thunderstorms, hail, and occasional tornadoes. According to the National Weather Service – Fort Worth Office, Collin County was struck by hail at least five times in 2023 alone. These events often lead to roof, siding, and window damage for McKinney homeowners, who then turn to their property insurers for help. Unfortunately, an unexpected property insurance claim denial can leave families facing costly repairs without the funds they expected. This guide explains Texas policyholder rights, common denial reasons, and the exact steps McKinney residents can take to appeal or litigate a wrongful decision.

Understanding Your Rights in Texas

1. The Insurance Contract

Your homeowners or commercial property policy is a contract. Insurers must honor covered losses in good faith. Under Texas Insurance Code Chapter 541, insurers are prohibited from using unfair or deceptive practices to avoid paying valid claims.

2. Prompt Payment Requirements

Texas Insurance Code Chapter 542 (often called the “Prompt Payment of Claims Act”) imposes strict deadlines:

• 15 calendar days to acknowledge, begin investigation, and request any necessary information after receiving written notice of a claim. (Tex. Ins. Code § 542.055)

• 15 business days (30 days if a weather-related catastrophe is declared) after receiving all requested items to accept or deny the claim. (Tex. Ins. Code § 542.056)

• If payment is owed, the insurer must pay within 5 business days after it notifies you it will pay. (Tex. Ins. Code § 542.057)

Failure to meet these deadlines may result in the insurer owing statutory interest (currently 18% per year) plus reasonable attorney’s fees.

3. The Right to Fair Settlement Practices

Under 28 Texas Administrative Code § 21.203, insurers must attempt “in good faith to effectuate prompt, fair, and equitable settlement of claims submitted.” This regulation is enforced by the Texas Department of Insurance (TDI).

Common Reasons Property Insurance Companies Deny Claims in Texas

Late Notice If a policy requires notice “promptly” or “as soon as practicable,” insurers may argue a delay in reporting prejudiced their investigation. However, Texas courts often require insurers to prove actual prejudice. (PAJ, Inc. v. Hanover Ins. Co., 243 S.W.3d 630, 635 (Tex. 2008)).

Coverage Exclusions Policies may exclude flood, earth movement, or wear-and-tear. Denials citing exclusions must specify the exact language and how it applies to the facts.

Pre-existing or Maintenance Damage Insurers sometimes assert that roof leaks or foundation issues resulted from age or neglect, not the peril claimed (e.g., hail or wind). Independent inspections from licensed adjusters or engineers can rebut these assertions.

Disputed Cause of Loss After hailstorms common to McKinney, insurers may blame cosmetic damage instead of functional impairment. Yet Texas courts recognize hail as a covered peril when it punctures roofing membranes (Great Am. Ins. Co. v. Lang, 416 S.W.3d 701 (Tex. App.—Houston [14th Dist.] 2013)).

Alleged Fraud or Misrepresentation Material misstatements can void coverage. However, the insurer bears the burden of proving misrepresentation was intentional and material to the risk.

Texas Legal Protections & Regulations

1. Statutory Bad Faith

Chapter 541 allows policyholders to sue for treble damages if the insurer commits unfair settlement practices knowingly. Examples include:

• Misrepresenting policy provisions.

• Failing to settle when liability is reasonably clear.

• Refusing to pay without conducting a reasonable investigation.

2. Common-Law Bad Faith

The Texas Supreme Court’s decision in USAA Tex. Lloyds Co. v. Menchaca, 545 S.W.3d 479 (Tex. 2018) clarified that an insurer may be liable for extra-contractual damages if its violation of the Insurance Code causes independent injury beyond policy benefits.

3. Limitations Periods

• Contract lawsuits: Generally four years (Tex. Civ. Prac. & Rem. Code § 16.004), but many policies shorten this to two years and one day—enforceable under Texas law (Tex. Ins. Code § 862.054). • Chapter 541 actions: Two years from the date the unfair practice occurred or was discovered (Tex. Ins. Code § 541.162). • Chapter 542 actions: Two years and 180 days (Tex. Ins. Code § 542.060).

4. Attorney Licensing

Only attorneys licensed by the State Bar of Texas may represent you in court. Out-of-state lawyers must secure pro hac vice admission and work with Texas counsel.

Steps to Take After a Denial in Texas

1. Review the Denial Letter

Texas Insurance Code § 542.056 requires a written explanation of the reasons for denial. Verify the cited policy language.

2. Request the Claim File

Under Texas Administrative Code § 28.804, an insurer must provide copies of all claim-related documents within 15 days of a written request.

3. Gather Evidence

• Before-and-after photos of the property

• Weather reports (hail size, wind speed) from the National Weather Service

• Independent contractor or engineer reports

• Repair invoices and estimates

4. File a Written Appeal

Cite specific contract provisions and attach your evidence. Reference Texas Insurance Code deadlines to place pressure on the carrier.

5. Complain to the Texas Department of Insurance

The TDI offers a free administrative complaint process:

Complete the online form at TDI Consumer Complaint.

• Attach the denial letter, policy, and any supporting documents.

• TDI assigns a file number and contacts the insurer, which must respond within 15 days. TDI then issues a written determination.

While TDI cannot order payment, its findings can strengthen a bad-faith case and often prompt reconsideration.

6. Invoke Appraisal (If Available)

Many Texas policies include an appraisal clause to resolve valuation disputes. Demand appraisal in writing within the timeframe stated in your policy (commonly 20–60 days after disagreement). Each side selects an impartial appraiser, and an umpire resolves differences. The appraisal award is binding on amount of loss but not on coverage.

7. Preserve Evidence and Deadlines

Keep communication in writing, track mailing dates, and calendar statutory limitation periods. Consider sending all correspondence by certified mail, return receipt requested.

When to Seek Legal Help in Texas

1. Pattern of Delay or Lowball Offers

If the insurer misses statutory deadlines or repeatedly issues partial payments that do not cover undisputed damage, an experienced Texas attorney can recover up to 18% interest and fees under Chapter 542.

2. Complex or High-Value Losses

McKinney’s rapid growth means homes frequently exceed $500,000 in value. Large losses raise the stakes and often draw heightened scrutiny from insurers’ special investigation units (SIUs).

3. Suspected Bad Faith

If the insurer misrepresents policy language, refuses to produce damage calculations, or pressures you to sign a low settlement release, legal counsel can pursue extra-contractual damages under Chapter 541.

Local Resources & Next Steps

• City of McKinney Building Inspections – 411 N. Tennessee St., McKinney, TX 75069: Obtain permits, inspection histories, and local building code requirements that may affect repair costs.

• Collin County District Courts – 2100 Bloomdale Rd., McKinney, TX 75071: Venue for lawsuits between $200 and any amount. Claims under $20,000 may proceed in Justice of the Peace courts.

• North Texas Roofing Contractors Association – Database of vetted contractors experienced with hail damage.

• Texas Department of Insurance Help Line – 1-800-252-3439: Confirm insurer licensing, file complaints, or request mediation information.

After exhausting internal appeals and the TDI complaint route, homeowners may file suit in Collin County. Under Tex. Civ. Prac. & Rem. Code § 15.032, actions on non-consumer property policies may be filed in the county where the property is located or where the loss occurred.

Legal Disclaimer

This guide is for informational purposes only and does not constitute legal advice. Laws and regulations change. Consult a licensed Texas attorney for advice tailored to your situation.

If your property insurance claim was denied, call Louis Law Group at 833-657-4812 for a free case evaluation and policy review.