Insurance Bad Faith

Published on June 05, 2012   Trevor A. Taylor

Insurance Bad Faith

Have you had an auto insurance, homeowners insurance, life insurance, commercial property insurance or health insurance claim denied.  I may be able to help.  Give me a call today for your FREE case evaluation by a board certified personal injury trial lawyer.

We buy insurance products to protect ourselves from some of life’s most serious losses.  Damage to our valuable property or our health.  The insurance relationship is based on trust.  We faithfully pay our insurance premiums.  In exchange for those premiums, we trust our insurance companies to be there and pay our claims when we most need them.

Sometimes insurance companies will breach that trust, refusing to pay legitimate claims when we most need them.

Prompt Pay Act

Consumers often complain about delay tactics they see from their own insurance company when trying to get a claim paid.  Under Texas law, insurance companies are required to meet strict deadlines in processing a claim.  For example, within 15 days of written notice of a claim, and insurer must a) acknowledge receipt of the claim, b) begin an investigation of the claim, and c) request from their policyholder information they reasonably need to adjust the claim.

Within 15 days of receiving all information it needs to resolve a claim, the insurer must send a written letter accepting or denying the claim.  If it denies the claim, the insurer must provide in writing the basis for the denial.  If an insurer delays more than 60 days after receiving the items it needs to adjust the claim, it can be made to pay damages for the delay.  Texas law entitles the insured damages under the policy, an 18 percent penalty on those damages for the delay of payment, plus reasonable attorneys fees.

Insurance Bad Faith

The contract between and insurance company and its insured creates a special relationship of trust.   Insurance companies owe their insureds the duty of “good faith and fair dealing” when adjusting their claims.  This is meant to deter the insurance company from using sharp practices to deny a claim.  Some of the unfair insurance practices Texas law prohibits:

  • Misrepresenting to the insured a material fact or policy provision that affects coverage;
  • Failing to attempt in good faith the settlement of a claim when the insurer’s liability has become reasonably clear;
  • Failing to promptly give the insured a reasonable explanation for the denial of a claim;
  • Refusing to pay a claim without conducting a reasonable investigation.

If an insurance company denies a claim in bad faith, it can made to pay damages.  Damages include the amount of the policy benefits denies, plus court costs and reasonable attorney fees.  If the denial of the claim was committed knowingly, the insurance company can be made to pay treble damages (up to three times the amount of actual damages).

If you or your business has been victimized by an unscrupulous insurance company, contact me today and have you case evaluated by a board certified personal injury trial lawyer.

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