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Paying insurance premiums is a fact of life for most Texans. From auto insurance to homeowners’ insurance and even disability insurance, most people pay insurance premiums for insurance policies to cover their needs in the event when future unforeseen and unexpected events occur. But what happens when something bad happens, and you need to file a claim under an insurance policy? Shouldn’t you be able to trust the insurance company to keep its part of the bargain by paying your insurance claim? After all, you’ve been paying your premiums religously for years, shouldn’t you be able to expect that when you’re in your time of need, your insurance company will be fair and pay for your insurance claim?
Insurance companies are businesses and they make profits by collecting premiums and investing the money, not by paying out on claims. So, don’t be surprised if the insurance company denies your claim. If this happens to you, and insurance company wrongfully denies your insurance claim, consult with an experienced attorney who handles insurance claims disputes to determine your rights.
If your insurance company refuses to pay your claim, you have certain remedies under Texas law that can force the insurance company to comply with its contractual obligation to pay for your losses. In some cases, you may need to file a lawsuit against your insurance company and ask the Court a to intervene and force the company to do what its obligated to do under the insurance policy.
Texas Law Requires that the Insurance Company Deal with you in Good Faith
As an insured covered under an insurance policy, you have the obligation to make premium payments and comply with the terms of the insurance policy to the best of your ability. In turn, the insurance company also has a contractual duty to comply with its obligations under the policy, including an obligation to fairly and timely pay any claims you make under the policy. If the insurance company breaks this contract by not paying fair value for your claim, you have the right to file a breach of contract claim against the insurance company under Texas law, and seek to recover damages.
In addition to its contractual duties under the policy, the insurance company has an obligation to deal with its insureds in a fair manner and in good faith. The Texas Supreme Court has said that the insurance company’s duty to deal fairly and in good faith “emanates not from the terms of the insurance contract, but from an obligation imposed in law as a result of a special relationship between the parties governed or created by a contract.” Viles v Security National Insurance Co., 788 S.W.2d 566, 567, (Tex. 1990). This means that the insurance company also has an obligation to its insureds to “investigate claims thoroughly and in good faith.” I
If an insurance claim has denied your insurance claim, and you believe it was done in bad faith, then you generally must prove that the insurance company’s conduct was unreasonable and that the company knew of its unreasonable conduct.
Here are some common types of insurance claims covered by bad faith laws:
Chapter 541 of the Texas Insurance Code provides that the following conduct by an Insurance Company may give rise to an Insurance Bad Faith Claim:
(1) misrepresenting to a claimant a material fact or policy provision relating to coverage at issue;
(2) failing to attempt in good faith to effectuate a prompt, fair, and equitable settlement of a [claim]
(3) failing to promptly provide to a policyholder a reasonable explanation of the basis in the policy, in relation to the facts or applicable law, for the insurer’s denial of a claim or offer of a compromise settlement of a claim;
(4) failing within a reasonable time to:
(A) affirm or deny coverage of a claim to a policyholder; or
(B) submit a reservation of rights to a policyholder;
(5) refusing, failing, or unreasonably delaying a settlement offer under applicable first-party coverage on the basis that other coverage may be available or that third parties are responsible for the damages suffered, except as may be specifically provided in the policy;
(6) undertaking to enforce a full and final release of a claim from a policyholder when only a partial payment has been made, unless the payment is a compromise settlement of a doubtful or disputed claim;
(7) refusing to pay a claim without conducting a reasonable investigation with respect to the claim;
(8) with respect to a Texas personal automobile insurance policy, delaying or refusing settlement of a claim solely because there is other insurance of a different kind available to satisfy all or part of the loss forming the basis of that claim; or
(9) requiring a claimant as a condition of settling a claim to produce the claimant’s federal income tax returns for examination or investigation by the person unless:
(A) a court orders the claimant to produce those tax returns;
(B) the claim involves a fire loss; or
(C) the claim involves lost profits or income.
(b) Subsection (a) does not provide a cause of action to a third party asserting one or more claims against an insured covered under a liability insurance policy.
As you can see, there are many ways in which an insurance company might wrongfully deny your insurance claim. Here are some real-world examples of potential insurance bad faith conduct.
- An insurance company decides to deny your insurance claim without giving you a reason.
- If you have submitted an insurance claim and your insurance company decides to ignore your request or the insurance drags it feet in investigating the claim.
- The insurance companies accept your claim and decides to pay your claim, but unreasonably delays payment to you.
- The insurance company makes an unreasonably low offer without proper justification or support for the low-ball offer.
- If you have provided all documentation to support your claim and to establish that it is valid, and the insurance company denies your claim.
- If the insurance company declines to provide you documentation regarding your claim.
Damages Available if the Insurance Company Denies your Claim in Bad Faith
An insured party who prevails against their insurer in a bad faith claim may be able to recover the amount of damages that were incurred, plus attorney costs and court fees, an order that order the insurance company to accept your claim and to do certain things under the policy, punitive or exemplary damages, and any other relief the count deems proper
An insurance claim is different from other types of cases like an auto accident case or slip and fall case. Therefore, it is important that you contact an experienced insurance claims attorney if your insurance claim has been wrongfully denied by the insurance company
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Zach took a chance on my case after I was denied by other attorneys, knowing it was complicated and already lengthy. He kept me informed every step of the way and fought for what we thought was a fair settlement. All in all, the entire process from hiring him to reaching a settlement, took only about two months and we were able to settle without a trial! I am very pleased with the result, and would highly recommend him.
Zach is just a really great guy, he is down to earth and very personable. He was very professional and understanding to our situation. He answered all our questions in a timely manner and never made us feel like we were inconveniencing him. I would recommend Zach to everyone.
If I could give a100 stars I would. Zach is very personable and always follow up with you right away. I’ve worked with Attorneys before in the past and they were just about the money and not for the client. I’ve also reached out to Zach for a friend needing and Attorney for handling his mom’s estate and Zach was able to assist with referrals. Zach, thank you so much for all you have done.
If you want someone to fight for you all the way through a jury trial then Zach is your man. He is just as much a Marine in the courtroom as he was serving our country. A lot of lawyers in Texas are afraid of juries, not Zach. My case settled but I stuck with Zach because insurance companies know he will take it to the bitter end if he has to.