Houston Bad Faith Insurance Claims Lawyer

What is a Bad Faith Insurance Claim?

Insurance companies have a general responsibility to use fair, good-faith settlement practices. A bad-faith insurance claim arises when an insurance company fails to fulfill its obligations to its policyholder as set forth by the terms of the policy. In other words, bad faith claims are essentially about an insurer’s intentional disregard of its obligations under the contract. There are two broad categories of bad faith insurance claims in Texas: 

• First Party Bad Faith Insurance Claims: A first party bad faith insurance claim occurs when an insurance company improperly handles a claim submitted by its own policyholder.  
• Third Party Bad Faith Insurance Claims: A third party bad faith insurance claim involves an insurer’s failure to defend/settle a claim within the policy limits on behalf of the insured. 

Insurance bad faith can affect many types of coverage, including homeowners’ insurance, health insurance, commercial property insurance, and auto policies. No matter what type of insurance policy you have, your insurance carrier is required by law to handle your claim fairly and in a reasonable timeframe.

Know the Law: Bad Faith Insurance Claims in Texas

Texas has bad faith insurance laws to protect policyholders and others from unfair practices by insurance companies. In Texas, an insurer acts in “bad faith” if it fails to attempt in good faith to reach a prompt, fair, and equitable settlement of a claim once liability becomes reasonably clear. Bad faith can also include the unreasonable denial, delay, or underpayment of a valid claim.

A bad-faith insurance claim may be brought under the common law in Texas or under the state’s bad-faith statute. The Texas Insurance Code, specifically Section 541.060, outlines what counts as unfair settlement practices under Texas insurance law. The Texas Department of Insurance also has rules that insurance companies must follow when handling claims. The law lists the following three things as examples of a bad faith insurance practice:

1. The failure to make a good faith attempt to reach a timely, fair settlement of an insurance claim after liability has become clear; 
2. The refusal to pay a claim without first conduct a comprehensive, reasonable investigation of the circumstances; and
3. The intentional or negligent misrepresentation of material facts related to the case or any relevant policy provisions. 

When an insurance company acts outside these rules, it may be acting in bad faith. Texas law gives policyholders the right to hold a bad-faith insurance company accountable for the harm those actions cause.

Common Bad-Faith Insurance Practices to Watch For

Not all bad faith is obvious. Insurance bad faith often shows up in subtle ways during the claims process. Knowing the common tactics that bad-faith insurance companies use can help you spot a problem early.

Some of the most common signs that an insurer acts in bad faith include:

• Denying claims without a valid reason or proper investigation
• Offering a lowball offer that does not reflect the true value of your loss
• Requesting unnecessary documentation to delay or wear down a claimant
• Misrepresenting policy language to avoid paying a legitimate claim
• Claim canceling or threatening to cancel coverage after you file
• Making unreasonable demands for proof that go beyond what the policy requires
• Failing to respond to your claim within a reasonable timeframe
• Avoid paying legitimate claims by shifting blame or disputing clear facts

If any of these sound familiar, it is worth speaking with a Houston bad faith insurance attorney. You deserve to be treated fairly, and the law is on your side when an insurance company fails to act in your best interests.

Compensation for a Bad Faith Insurance Claim in Texas

Were you the victim of a bad faith insurance practice in Houston or elsewhere in Southeast Texas? You have the right to pursue compensation for the full scope of your damages through a bad-faith insurance claim. A successful bad faith insurance claim may include compensation for: 

• Value of Initial Claim: The foundation of a bad-faith insurance claim in Texas is the value of the underlying policy claim that the insurer should have paid. Indeed, it is this amount that represents the benefits that would have been owed if the insurer had acted in good faith. Through a successful bad faith claim, you can recover the full value of the original claim. It is crucial that the underlying claim is comprehensively documented. 
• Additional Costs: Beyond the value of the initial claim, an insured may also recover costs directly attributable to the insurer’s bad faith, such as expenses incurred while handling or investigating the issue. These might include the cost of securing alternative insurance coverage, out-of-pocket losses, and other related damages that would not have arisen if the insurer had paid the claim in a timely manner. A bad-faith insurance claim denial can cause real financial hardship. People miss mortgage payments, skip medical care, or lose property because their insurance carrier refused to pay a legitimate claim.
• Attorneys’ Legal Fees: Texas statutes allow a prevailing plaintiff in a bad faith insurance claim to recover reasonable and necessary attorneys’ fees in certain bad faith claims. In other words, our state has a fee-shifting rule for bad faith insurance claims. Though fee-shifting is discretionary by the court. 
• Exemplary Damages: While not awarded in every bad-faith insurance claim, Texas allows the award of exemplary damages. Also known as punitive damages, exemplary damages are essentially a form of penalty damages. Texas courts may award these damages when the insurer’s actions were committed knowingly or with reckless disregard for the policyholder’s rights. 

Note: Texas follows the Stowers doctrine. Under the legal doctrine, an insurer that fails to accept a reasonable settlement demand within policy limits when liability is clear may be liable for the full amount of a subsequent judgment, even if it exceeds policy limits.

Why Trust the Houston Bad Faith Insurance Lawyers at The Stano Law Firm

Bad-faith insurance claims are complicated. Insurance companies must use good-faith settlement practices, but unfortunately, far too many of them fail to do so. Whether you are bringing a first-party bad faith claim or a third-party bad faith claim, it is important that you have strong and experienced legal representation.

Our founder and lead attorney, Matthew C. Stano, is a strong and aggressive advocate for justice. With millions of dollars recovered for clients, we have a proven track record that you can trust. Our Houston bad-faith insurance lawyers understand how bad-faith insurance companies operate and what it takes to hold an insurance carrier accountable. When you contact us at our Houston office, you will have an opportunity to consult with a Texas bad faith insurance attorney who can:

• Conduct a comprehensive, confidential review of your bad faith insurance case;
• Investigate your bad faith insurance denial—gathering all relevant evidence; 
• Handle your insurance claim and represent you in any settlement talks; and
• Take aggressive action to help you get the maximum bad faith damages. 

Frequently Asked Questions About Bad-Faith Insurance Claims

How do I know if my insurance company is acting in bad faith?

If your insurance carrier denied your claim without explanation, made a lowball offer on a clear loss, or dragged out the claims process with unnecessary documentation requests, those are warning signs. An insurance company acts in bad faith when it puts its own profits ahead of your rights under the policy. The best way to find out for sure is to speak with a Houston bad faith insurance attorney who can review your claim denial and spot any deceptive practices.

What is the difference between a claim being denied and a bad-faith denial?

Insurance companies can legally deny claims when there is a valid reason, like a coverage exclusion in the policy language. A bad-faith denial is different. It happens when the insurance company denies your valid claim without a legitimate basis, fails to investigate properly, or misrepresents what your insurance policy actually covers. If the insurer acts without good cause, that is when bad faith insurance law applies.

Can I sue my insurance company for bad faith in Texas?

Yes. Texas law allows policyholders to file a bad-faith insurance lawsuit against their insurance carrier. You can pursue compensation for the value of the original claim, additional costs caused by the delay or denial, legal fees, and, in some cases, punitive damages. The Texas Insurance Code gives you specific rights when an insurance company fails to handle your claim fairly. A Houston bad faith insurance claims lawyer can help you understand what you may be able to recover.

How long do I have to file a bad faith insurance claim in Texas?

Texas law sets deadlines for filing bad faith insurance claims, so it is important to act quickly. Waiting too long can hurt your case or eliminate your right to pursue compensation altogether. If you believe your insurance company is acting in bad faith or has already denied a legitimate claim, contact a bad faith insurance attorney as soon as possible to protect your rights.

Does filing a bad-faith insurance claim cost money upfront?

At our law firm, you can start with a free consultation at no cost to you. We handle bad-faith insurance cases and work to hold insurance companies accountable for their actions. Reaching out costs nothing, and it is the first step toward getting the fair settlement you deserve.

Contact Our Houston Bad Faith Insurance Attorney Today

At The Stano Law Firm, our Houston bad faith insurance lawyer has the skills, knowledge, and expertise to hold large insurance companies accountable. Bad-faith denials are not an acceptable practice. If you or your loved one had an insurance claim denied in bad faith, please do not hesitate to contact us today for a free, completely confidential consultation.

When disaster strikes, and you file a claim expecting help, the last thing you should face is an insurance company that ignores your valid claim or uses deceptive practices to avoid paying. You paid your premiums, and you deserve to be treated fairly. With an office in Houston, we handle bad faith insurance claims in Harris County and throughout Southeast Texas.

Our Houston bad faith insurance claims lawyer is ready to review your case, explain your legal options, and take aggressive action on your behalf. Reach out today for a free consultation. There is no obligation and no cost to get started.