Bad Faith Insurance in Texas
If you are injured in an accident or other personal injury incident, you will likely deal with the at-fault party’s liability insurance company. Liability insurance compensates injured parties for covered losses caused by the insured.
Insurance companies have a duty to investigate claims and treat claimants fairly. If an insurer acts in bad faith, the claimant could have a separate claim against the company. In some cases, an insured could have a bad faith insurance claim against their provider.
What Are Bad Faith Insurance Practices in Texas?
An insurance policy is a contract. The insured pays premiums to have coverage for specific events and circumstances. For example, a car insurance policy covers damages if the insured causes a crash. In exchange for the payment of premiums, the insurance company has a duty to take certain steps when processing claims.
The Texas Insurance Code requires that insurers act in good faith, which includes:
- Acknowledging the filing of a claim
- Timely processing claims
- Accurately reporting information about the insured’s coverage
- Providing a reasonable and valid reason for denying an insurance claim
- Attempting to settle claims for a fair settlement amount
The law prohibits insurance companies from using deceptive or unfair practices or acts. Therefore, if an insurer fails to process a claim in good faith or uses deceptive, fraudulent, or manipulative practices, these actions could constitute bad faith.
Examples of Bad Faith Insurance Practices in Texas
It can be difficult to tell when an insurance company acts in bad faith. Insurance adjusters protect the company from liability. Therefore, they try to lower the value of damages and deny claims whenever possible.
However, some actions cross the line between aggressively investigating a claim and bad faith insurance practices.
Examples of bad faith insurance practices include, but are not limited to:
- Failing to acknowledge a claim within 15 days
- Requesting unnecessary information and documents to delay a claim or extend the claims process
- Misrepresenting insurance laws or policy terms
- Denying an insurance claim without a legitimate reason
- Intentionally undervaluing damages and offering less than the claim is worth
- Insisting that a person accept an unreasonable settlement offer
- Recommending that a claimant not contact an attorney or tell them they do not need legal counsel
- Delaying payment for the claim once a settlement agreement has been signed
- Modifying the insurance policy’s terms after a claim has been filed
Contact a Texas personal injury lawyer if you believe an insurance company has acted in bad faith. You may have a third-party or first-party claim against the insurance company for bad faith practices.
Is the Denial of My Insurance Claim in Bad Faith?
An insurance company has the right to deny claims for valid reasons. The insurer is not legally obligated to pay a claim simply because there is an insurance policy. However, there must be grounds to deny the claim.
Legal grounds for denying an insurance claim include:
- The claimant missed the filing deadline
- The insurance policy does not cover the accident or incident that resulted in injury or loss
- The damages sought are unreasonable or unnecessary
- The insurance policy has lapsed
- There was a violation of state law
- The claim involves an error
- There is insufficient evidence to prove that the insured was at fault for the accident
- The insurance policy does not cover the types of damages claimed
Don’t give up if an insurance company denies your claim without consulting an attorney. You have the right to appeal the denial but must follow the appeals process and meet specific deadlines. A Texas personal injury attorney can review your case to determine whether the company had legal grounds to deny the claim and was acting in good faith when doing so.
Filing a Bad Faith Insurance Claim in Texas
Texas law provides for first-party and third-party bad faith claims. The type of claim you file depends on your role in the case.
A first-party claim is filed by the insured against their own insurance company.
For example, you are involved in an auto accident and file a claim against your collision insurance. Collision insurance coverage reimburses the insured for damages sustained if their vehicle is involved in a crash they caused. If your insurance company acts in bad faith regarding your collision claim, you may have a first-party bad-faith insurance claim.
A third-party claim is filed by an accident victim against someone else’s insurer.
For example, you are involved in a car accident caused by another driver. You could file a claim with that driver’s liability insurance company.
Liability insurance compensates victims for damages when the insured causes an accident. If the insurer refuses to pay your claim or acts in bad faith, you may have a third-party bad-faith insurance claim.
What Damages Are Available in Bad Faith Insurance Claims in Texas?
Damages in a bad faith insurance claim may include:
- The economic and non-economic damages in your initial insurance claim
- Attorney’s fees and costs for bringing the bad faith insurance claim
- Emotional distress
- Other relief the court may find proper
The court may award treble damages if the insurance company knowingly violated Texas insurance laws. Treble damages are equal to three times the total of your actual damages.
What Is the Statute of Limitations for a Bad Faith Insurance Claim in Texas?
The Texas statute of limitations limits your time to file a claim for bad faith. Most bad-faith insurance lawsuits must be filed within two years. Missing the deadline means you lose the right to take legal action against the insurance company.
The best way to protect your rights is to seek legal advice as soon as you suspect the insurer may be acting in bad faith. Contact a Galveston bad-faith insurance lawyer for a free consultation to discuss your legal options.
Contact the Texas Car Accident Lawyers of The Law Firm of Alton C. Todd Personal Injury Lawyers in Friendswood, TX for Help Today
Please contact an experienced car accident lawyer at The Law Firm of Alton C. Todd Personal Injury Lawyers to get a free initial consultation today. We can also help you recover as much compensation as possible; keep in mind the insurance company does not have your best interests in mind.
We have offices in Friendswood and Galveston, Texas. Call us at (281) 992-8633.
The Law Firm of Alton C. Todd Personal Injury Lawyers – Galveston
2101 Mechanic St. Suite 253
Galveston, TX 77550
The Law Firm of Alton C. Todd Personal Injury Lawyers – Friendswood
312 S. Friendswood Dr.
Friendswood, TX 77546
