Complaints related to unfair claims practices represent a significant portion of annual insurer complaints, underscoring the prevalence of bad-faith issues among policyholders. A bad-faith claim in Texas occurs when an insurance company unfairly or dishonestly handles your insurance claim. For example, an insurance company denies a valid claim without a reasonable investigation or delays payment unreasonably.
Under Texas law, policyholders have specific protections and remedies available for such misconduct. Texas enforces rigorous penalties for insurers to promote fairness, reflecting the importance the state places on consumer protection.
What Constitutes Bad-Faith Insurance Conduct in Texas?
Texas Insurance Code Chapter 541 prohibits insurance companies from using unfair methods of competition and deceptive acts.
Examples of bad-faith insurance practices include:
- Failing to acknowledge the filing of a claim
- Denying claims without a reasonable investigation
- Misrepresenting policy terms or coverage
- Delaying claims processing or settlement unreasonably
- Offering unreasonably low settlement amounts
- Failing to communicate promptly and clearly
- Using abusive or threatening tactics to discourage claims
- Changing the terms of the insurance policy after a claim is filed
- Withholding information or failing to explain claim denials
- Recommending that a claimant not seek legal counsel
- Requesting unnecessary information or documentation
It can be challenging to recognize bad-faith insurance tactics. Insurers can deny or extend claims for valid reasons. If you are unsure whether you are the victim of bad-faith insurance tactics, the best way to protect your rights is to discuss bad-faith claims with a Galveston bad-faith insurance lawyer.
The Insurance Company Denied My Claim – Do I Have a Bad-Faith Claim?
Insurance companies have the right and responsibility to investigate claims. They can deny insurance claims for valid legal reasons.
Grounds for denying an insurance claim include, but are not limited to:
- The insurance policy lapsed for non-payment
- The policy does not cover the type of loss
- The claimant missed the deadline for filing a claim
- There is insufficient evidence proving that the insured caused the accident or incident resulting in the person’s damages
- The claim involves fraud or a violation of state law
Do not accept the denial of an insurance claim without seeking legal advice from an attorney. Insurance companies may hide bad-faith tactics in legal jargon or try to convince claimants that the denial of the claim is their fault. Always speak with an attorney to determine if the denial of your claim is based on valid legal grounds.
Texas Statutory and Common Law Bad-Faith
Texas recognizes two types of bad-faith claims. Statutory bad faith is based on violations of the Texas Insurance Code’s prohibitions on unfair practices. Common law bad-faith arises when insurers breach their duty of good faith and fair dealing, causing harm beyond mere breach of contract.
A first-party bad-faith claim occurs when the policyholder (i.e., the insured) files a claim against their own insurance company. A third-party bad-faith claim occurs when a person files a claim against another person’s insurance coverage. For instance, an accident victim files a bad-faith claim against an insurance company for refusing to pay a valid claim arising from a car accident.
Statute of Limitations for Bad-Faith Claims in Texas
In Texas, you generally have two years from the date you discover (or reasonably should have discovered) the insurer’s unfair or deceptive act to file a bad-faith lawsuit. This timeframe is shorter than typical contract claims, so timely action is crucial.
Possible Damages and Remedies for Bad-Faith Claims in Galveston, TX
Recoverable economic and non-economic damages in Texas bad-faith claims can include:
- Contract damages – The benefits owed under your insurance policy.
- Consequential damages – Financial harm caused by delays or wrongful denials (e.g., extra loans or business losses).
- Attorney’s fees and court costs – Often recoverable for the winning policyholder.
- Statutory penalties & interest pursuant.
- Punitive damages in egregious cases are used to punish bad conduct and deter future misconduct.
- Mental anguish damages for emotional distress caused by insurer conduct in select cases.
If you believe your insurer is acting in bad faith, it is vital to document all communications and unreasonable delays. Consult an experienced Texas bad-faith insurance attorney who can investigate and build your case.
Contact The Law Firm of Alton C. Todd Personal Injury Lawyers for a Free Consultation
For residents and businesses in Galveston, bad-faith insurance claims are a serious matter requiring prompt legal action and expert guidance. The Law Firm of Alton C. Todd Personal Injury Lawyers provides knowledgeable representation to protect your rights and maximize recovery. Contact our office to schedule a free consultation at (409)-207-9299 with a Galveston bad-faith claim lawyer to evaluate your claim and hold insurers accountable.
