If you are engaged in a dispute with an insurance company, you know how frustrating the situation can be. Insurance companies are experienced and highly skilled in finding ways to deny claims or to pay out less than their policyholders deserve.
When you are in that situation, you may be tempted to take an unsatisfactory offer from your insurer simply because you don’t want to keep arguing. And more seriously, you may be financially desperate enough to settle for less than your claim is worth.
That’s a terrible position for you to be in. You may have been paying your premiums on time for years, only to find that when you really need your insurance company to help you out, it treats you like an annoyance.
In some cases, you may have a possible remedy through a legal action known as a bad faith insurance claim.
What is insurance bad faith?
Texas imposes a duty of good faith and fair dealing on all insurance providers. When an insurance company acts unreasonably in denying a claim, delaying payments or other behavior, it breaches that duty. The policyholder who suffers damages as a result may hold the insurance company liable for what they lost as a result.
You may be able to pursue what is known as a common-law bad faith insurance claim, in which you try to convince the court that the company breached its contract with you, or acted fraudulently.
Another type of claim is known as a statutory bad faith insurance claim. This type of claim alleges that the insurance company violated specific rules in the Texas Insurance Code. This statute includes a long list of the most common types of wrongful behavior sometimes practiced by insurers, such as false advertising, misrepresentation of material facts and forcing the insured to close out a claim before it has made all payments.
As noted above, insurance companies are highly skilled at finding ways to deny claims. They’re also very good at winning in negotiations. Their entire business model depends on limiting the amount of money they pay out to their customers, and so they have a strong incentive to deny your claim or give you less than your claim is worth.
At any point in your negotiations, it can be a good idea to get an experienced advocate on your side. Attorneys advise people of their options, including the option of filing a bad faith claim.