At Jay Murray Law, we help Texans hold insurance companies accountable when they fail to meet their obligations. Understanding your rights is the first step toward getting the compensation you deserve.
What is a Bad Faith Claim in Texas?
A bad-faith insurance claim arises when an insurance company fails to fulfill its legal duty to its policyholder. In Texas, insurers must handle claims promptly, investigate thoroughly, and pay valid claims without unreasonable delay.
When an insurer violates these duties, policyholders can file a bad faith lawsuit. Texas law requires insurers to act with honesty and fairness. If they breach this duty by denying coverage without proper justification, failing to conduct adequate investigations, or refusing to communicate clearly, they may face legal consequences.
The Texas Insurance Code and common law establish that insurers owe a duty of good faith and fair dealing to their customers. This means they cannot prioritize profits over legitimate claims. If your insurer has treated you unfairly, you may have grounds for a bad-faith claim.
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Recognizing Bad Faith Insurance Practices
Identifying bad faith behavior helps you protect your rights. Several red flags indicate an insurer may be acting in bad faith:
Unreasonable Claim Denials
When an insurance company denies a valid claim without proper investigation or reasonable justification, this raises immediate concerns. Denials should be based on policy language and facts, not arbitrary decisions.
Delayed Investigations
Insurers must investigate claims within reasonable timeframes. If your provider drags out the investigation for months without explanation, they may be acting in bad faith.
Lowball Settlement Offers
Offering significantly less than a claim is worth, especially when damages are clear, suggests the insurer is not acting fairly. This tactic pressures policyholders to accept inadequate compensation.
Failure to Communicate
Ignoring phone calls, not responding to emails, or refusing to explain denial reasons are warning signs. Policyholders deserve clear explanations about their claims.
Misrepresenting Policy Terms
Some insurers twist policy language to deny coverage. If your provider claims your policy doesn’t cover something that clearly falls within its terms, they may be acting in bad faith.
Failing to Provide Prompt Payment
Even after accepting a claim, some insurers delay payment unreasonably. Texas law requires prompt payment once liability becomes clear.
Which Insurer Actions Could Lead to a Bad Faith Claim?
Specific insurer behaviors give rise to bad faith claims in Texas. Understanding these actions helps you recognize when your rights have been violated.
Inadequate Investigation
Insurance companies must thoroughly investigate claims before making decisions. Failing to interview witnesses, review medical records, inspect property damage, or gather relevant evidence may constitute bad faith.
Denying Claims Without Explanation
When insurers deny claims without providing clear, written reasons based on policy language, policyholders cannot understand or challenge the decision. This lack of transparency often indicates bad faith.
Refusing to Defend Policyholders
Liability policies require insurers to defend policyholders against covered claims. If your insurer refuses to provide defense counsel when they should, this breaches their duty.
Ignoring Evidence
When insurers disregard evidence supporting a claim, such as medical bills, repair estimates, or witness statements, they violate their duty to fairly evaluate claims.
Making False Statements
Insurers who lie about policy coverage, deadlines, or claim procedures engage in bad faith conduct. Policyholders rely on accurate information to make informed decisions.
Is Bad Faith Hard to Prove?
Proving bad faith requires demonstrating that your insurer acted unreasonably, not just that they denied your claim. Texas courts look at whether the insurer had a reasonable basis for its actions.
The challenge lies in showing that the denial or delay lacked justification. You must prove the insurer knew or should have known their actions were improper.
This often requires expert testimony, internal company documents, and detailed evidence of the claim handling process.
Many bad-faith cases succeed when evidence shows the insurer ignored policy language, failed to investigate properly, or acted inconsistently with their own procedures. Having an experienced attorney makes a significant difference in gathering this evidence and building a strong case.
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What is Evidence of Bad Faith?
Strong evidence supports successful bad faith claims. Key types of evidence include:
Internal Company Documents
Emails, memos, and notes between adjusters and supervisors often reveal the insurer’s true motivations. These documents may show they knew a claim was valid but denied it anyway.
Claims File
The complete claims file contains investigation reports, adjuster notes, and communications. Gaps in the investigation or contradictions between what the adjuster knew and what they reported can prove bad faith.
Witness Testimony
Statements from former insurance company employees, medical professionals, contractors, or other witnesses can demonstrate that the insurer acted unreasonably.
Comparative Claims
Evidence showing that the insurer approved similar claims for other policyholders but denied yours can demonstrate discriminatory or arbitrary decision-making.
Timeline Documentation
Documenting every interaction with your insurer, including dates, times, and what was discussed, creates a record of delays and failures to communicate.
Expert Opinions
Insurance experts can testify that the company’s handling of your claim fell below industry standards, supporting your bad faith allegations.
How Much is a Bad Faith Claim Worth?
The value of a bad faith insurance claim in Texas depends on several factors. Damages typically include the amount the insurer should have paid under the policy, plus additional compensation for the harm their bad faith caused.
Policy Benefits
You can recover the full amount your insurer should have paid under the policy terms.
Consequential Damages
These include financial losses caused by the wrongful denial, such as medical bills you paid out of pocket, lost income, or additional property damage that occurred while waiting for repairs.
Mental Anguish
Texas law allows recovery for emotional distress caused by the insurer’s bad faith conduct. This recognizes the stress and anxiety of fighting with your insurance company during an already difficult time.
Attorney Fees
Unlike typical lawsuits, successful bad faith claims in Texas often result in the insurer paying your attorney fees. This levels the playing field between individual policyholders and large insurance companies.
Punitive Damages
In cases involving particularly egregious conduct, Texas courts may award punitive damages to punish the insurer and deter similar behavior in the future.
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Time Limits to File Bad Faith Insurance Claims in Texas
Texas law imposes strict deadlines for filing bad faith claims. Generally, you have two years from the date of the wrongful denial or delay to file a lawsuit. Missing this deadline typically means losing your right to sue.
The clock starts when you know or should have known about the bad faith conduct. In some cases, this may be when the insurer denied your claim. In others, bad faith only becomes apparent after repeated delays or inadequate settlement offers.
Because these deadlines are firm and exceptions are rare, contacting an attorney quickly after recognizing bad faith behavior protects your rights. Waiting too long can permanently bar your claim, regardless of how strong your case might be.
Fighting Back Against Insurance Companies
When insurance companies put profits over people, Texas law provides remedies. Bad faith claims hold insurers accountable and help policyholders recover what they rightfully deserve.
At Jay Murray Law, we know insurance companies have teams of lawyers protecting their interests. You deserve experienced representation fighting for yours. If you believe your insurer has acted in bad faith, we can evaluate your claim, gather evidence, and pursue the compensation you need.
Insurance companies count on policyholders accepting unfair denials or inadequate settlements. Don’t let them get away with it. Understanding your rights under Texas law empowers you to stand up against bad faith practices.
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