We often rely on insurance when sudden injuries or accidents occur. If your insurance company denies your claim when it should have been approved, it may be engaging in bad faith.
You may sue your insurance company if you believe it denied your claim in bad faith. You should contact a lawyer to help you gather evidence and build a case as soon as possible. We must review the specific terms and conditions in your insurance policy. Often, a person’s claims are obviously covered, but their insurance company still denies them, delays the claim, misrepresents claims, or otherwise acts in bad faith.
Get a free, private case analysis from our Austin, TX bad faith insurance lawyers by calling Cap City Injury Attorneys at (512) 612-3110.
Can I Sue an Insurance Company for Denying My Claim in Bad Faith?
The Supreme Court of Texas did not recognize a cause of action for bad faith until the case of Arnold v. Nat. County Mut. Fire Ins. Co. The duty of good faith and fair dealing arises in insurance contracts because of the “special relationship” between the insurance provider and the insured. The parties have inherently unequal bargaining power, and a duty of good faith keeps them from taking advantage.
Insurance companies are legally required to play fair when processing claims. According to Tex. Ins. Code § 542.003(a), insurance companies are prohibited from engaging in any practices that may be considered unfair claims practices. However, this statute does not create a legal cause of action but only describes prohibited insurance practices.
What Constitutes Bad Faith?
Under Tex. Ins. Code § 542.003(a), numerous practices are considered illegal and may be deemed bad faith practices in your lawsuit:
Misrepresentation
A common form of bad faith involves intentional or knowing misrepresentation of important facts and details about your claim or insurance policy. Your insurance company might have misled you about what the policy covers or how you file claims, so that they can later deny you.
Unnecessary or Unreasonable Delays
Once your insurance company receives your claim, it must be acknowledged within 15 days, unless special conditions apply, according to Tex. Ins. Code § 542.055(a). If your insurance company causes unnecessary delays in your claim, they may be acting in bad faith.
Denying a Valid Claim
More overt acts of bad faith may involve wrongfully denying a claim that should be covered. Sometimes, this kind of bad faith is more obvious. For example, if your policy very clearly and explicitly covers your claim, but it is denied anyway with little explanation, you should call a lawyer immediately.
Failing to Investigate a Claim
Certain claims require investigation to be properly processed and approved. If your insurance company fails to investigate or does not investigate adequately, it might deny your claims as a result. In such a case, you can sue them for failing to investigate.
Other Unfair Practices
- Compelling a policy holder to initiate a lawsuit to recover the amount due by offering significantly less than what is ultimately recovered in the lawsuit.
- Failing to maintain and save important records and communications regarding your policy and complaint.
- Doing anything else that the insurance commissioner determines is an unfair claim settlement practice.
Preparing to Sue an Insurance Company for Bad Faith Dealings
Before filing a lawsuit against an insurance company, get help from a lawyer. Your attorney can review your claim to determine if any bad faith practices occurred and determine the value of your claims.
Contact an Attorney
Insurance companies often have robust legal departments ready to take down your claims as soon as you bring them up. The best thing you can do for yourself is to get help from an experienced attorney.
Your attorney can identify the bad faith actions taken by your insurance company, find evidence to prove your claims, and build your case so that it is strong and you are more likely to get the compensation to which you are entitled.
Gather Evidence
A good place to start with evidence is your insurance policy itself, as this is a legal contract between you and your insurance provider that spells out the terms and conditions of how you are to be compensated. We should also save all communications you have had with your insurance company, including letters, emails, and phone calls.
Prepare a Formal Legal Complaint
Your lawsuit begins with a formal complaint that outlines how we believe bad faith insurance practices occurred, provides evidence to support your claims, and explains your damages. Our Austin, TX personal injury lawyers must draft the complaint carefully, as it may set the tone for the rest of the case.
How to Prove Your Claim Was Denied in Bad Faith
Proving your claim was denied in bad faith requires extensive evidence. Below are a few good places to begin collecting evidence for your case.
Review Your Insurance Policy
First, we must look over the terms of the policy that covers your claims. In some cases, a policy holder’s claims are obviously covered, and the bad faith denial by their insurance company is readily apparent. In others, the insurance company might be taking advantage of vague terms or unfair loopholes to deny claims.
Communications from Your Insurance Company
From the moment you submit your claims to your insurance company, everything should be properly documented. When you received a denial, it should have come in the form of a formal letter in the mail. Any communication between you and your insurance company, including your denial letter, emails, other letters, and more, may be used as evidence to build your case.
Depositions of Insurance Representatives
To gather more facts and information, we may need to depose insurance representatives and others connected to the case. Depositions are a formal question-and-answer session where those being deposed are placed under oath. This is not part of the trial and occurs as part of the discovery process.
FAQ About Bad Faith Insurance Cases in Texas
Can I Sue an Insurance Company for Denying My Claim?
Yes. If you believe your insurance company wrongfully denied your claim or they denied it using illegal or deceptive practices, you can sue them for the value of your claim plus additional damages. In another person’s insurance provider wrongfully denies your claim, you may sue the other person, and their insurance may be compelled by the court to cover your damages.
How Do I Know an Insurance Company Denied My Claim in Bad Faith?
Identifying bad faith dealings can be difficult, but it often begins with a denied claim. If your insurance company denies your claim and offers little to no explanation, or the denial feels unfair, you should ask an attorney about bad faith insurance practices.
How Do I Begin a Bad Faith Insurance Lawsuit?
To start a lawsuit against an insurance company, you must speak to an attorney who has experience suing insurance companies for bad faith. Your attorney can help you build your case, develop your claims, and maximize your compensation.
How Do I Prove an Insurance Company Acted in Bad Faith?
To prove that your insurance company acted in bad faith, we must demonstrate how they denied your claim when it should have been approved. There are various ways in which an insurance company might deal in bad faith, and this conduct usually goes above and beyond simple denials.
How Much is a Lawsuit Against an Insurance Company for Bad Faith Worth?
The value of your case depends on the value of your initial insurance claim and the value of additional damages, including punitive damages, you incurred because of your insurance company’s bad faith dealings.
How Long Do Bad Faith Insurance Lawsuits Take?
The duration of a lawsuit may be unpredictable, but many cases take at least several months to complete. More complex cases might take a year or longer.
Speak to Our Texas Bad Faith Insurance Attorneys for Help Immediately
Get a free, private case analysis from our Round Rock, TX personal injury lawyers by calling Cap City Injury Attorneys at (512) 612-3110.