Texas Bad Faith Insurance Claim

Feltoon Law, PLLC  |  2520 S I-35 Frontage Rd #200 Austin, TX 78704  | (737) 281-9100

Bad Faith Insurance Claim

A bad faith insurance claim is a legal action policyholders can take against insurers for failing to fulfill the promises found within the insurance policy. 

Insurance companies are required to act in “good faith”, which means they must provide the full benefits and protection you paid for under your insurance policy. They also need to act in a timely, fair, and honest manner. Failing to do so results in harm or losses that exceed what would have occurred had the insurer acted honestly. 

In Texas, policyholders can file a bad faith insurance claim whenever the faith they put into a insurance company is exploited.

There are two major types of bad faith claims, first-party bad faith and third-party bad faith. 

First-party claims occur when an insurer declines to fulfill a claim without a valid reason to do so or fails to conduct a timely and adequate investigation. Imagine a policyholder gets into a car accident and submits a claim to their insurance to get medical treatment. If the insurance company refuses to process the claim without valid justification, this is considered first-party bad faith.

Third-party claims occur when someone else’s insurance company neglects its duty to protect and resolve a claim brought against you. For example, if a person with insurance causes a car crash, their policy should help pay for any damages and injuries to others from the accident. If an insurance company refuses to represent the interests of this person, they will have taken advantage of the faith this person gave them and also put this individual in a position of liability that could have been prevented.

  • Unreasonable Denial of Coverage: If a policyholder submits a claim for coverage that should be covered within their policy and this claim is denied without a valid reason, the insurance company has failed to uphold their responsibilities.
  • Delayed Payment of Claims: Insurance companies must process a claim made by a policyholder within a reasonable amount of time. If policyholders are left waiting for an unusually long period of time, the missing reimbursement can lead to financial strain, stress, and difficulties covering expenses. This delay can also prevent policyholders from receiving timely medical treatment or repairing their vehicle.
  • Inadequate Investigation: Investigations are conducted by insurance companies when policyholders file a claim. If they do not investigate enough or ignore evidence, policyholders may get their claim unfairly denied or delayed.
  • Offering Low Settlements: A policyholder is entitled to a certain amount of coverage when they pay for an insurance policy. An insurance company undermines the policyholder’s trust and acts in bad faith if they offer a settlement that is much lower than what is fair and reasonable.
  • Failure to Communicate: Insurance companies need to be honest and communicative to their policyholders. They are required to respond to policyholder inquiries, provide updates on claim status, and answer requests for assistance. If they fail to communicate well, they are acting in bad faith.
  • Failure to Defend: Insurance companies are required to provide legal defense to policyholders if they are sued by someone for causing injury or damage. If they fail to cover legal expenses, they are breaking their contractual promise to the policyholder.
  • Refusal to Compensate: This third-party bad faith claim occurs when an insurance company refuses to provide coverage for a third party’s damages, even though the policyholder is responsible for the incident and the incident should be covered in their policy.
  • Offering Low Settlements: The insurance company unreasonably delays the settlement of a third-party claim, causing financial hardship and distress to the injured party.
  • Inadequate Investigation: A thorough and timely investigation must be conducted by the insurance company when the third-party policyholder makes a claim. If they do not examine the circumstances of the incident or the validity of the third-party claim, there could be a delay or denial of coverage.

If you have a bad faith insurance claim, it’s crucial to seek legal guidance from a trusted personal injury attorney. An experienced attorney can evaluate the details of your situation and advice you on a best course of action. They will also assist you in gathering evidence to support your claim and negotiate with the insurance company on your behalf.

If you have a bad faith insurance claim, Jason Feltoon of Feltoon Law is a trusted personal injury attorney in Austin, TX that can support you. Call (737) 281-9100 today for a free consultation!

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