Most Americans purchase insurance policies to protect against the loss of their home, health or possessions. Being insured and paying for a policy means the insurance company must not only protect the insured against instances like theft, damage or loss, but in Texas, it must do so fairly and in good faith.
The insurance company drafts the policy and contract language. As with most consumer contracts, a consumer has little to no ability to negotiate these policies and contracts. On top of that, when it comes time to pay a claim, the insurance company holds all of the cards because an insurance company has the ultimate control over the evaluation, processing, and denial of its insureds’ claims. An insurance company could take advantage of its position of power and treat its insureds unfairly, paying out nothing or as little as possible in the hopes that the insured gives up and goes away. In order to combat this potential abuse of power, Texas law has recognized that an insurer must treat its insureds fairly and in good faith, specifically in the context of handling insurance claims. If the insurance company doesn’t live up to this duty, then a jury can award an insured extra damages for the insurance company’s abuse of its duty.
When an insurance company takes advantage of an insured’s hardship and unfairly handles a claim, it is liable for breaching the duty of good faith and fair dealing or, in other words, for acting in bad faith. Recognizing a breach of this duty is important in knowing how to move forward.
An insurance company is liable for acting in bad faith if it denies or delays payment of a claim when it knows or should know coverage is reasonably clear. If the insurance company has no reasonable basis for denying or delaying payment of your claim, and does so anyway, it is in breach of the duty of good faith and fair dealing. Additionally, if the insurance company does not properly and thoroughly investigate your claim or merely investigates your claim for the sole purpose of denying it, the insurance company is liable for acting in bad faith.
If you think that an insurance company has unfairly handled or investigated your insurance claim, contact an attorney and gather all records you may have relating to the claim, including a copy of your policy on which the claim was made. An experienced lawyer will be able to help you understand the duties owed to you under both your policy and the law of your state so that you can try to get what you paid for in the first place.