Insurance Bad Faith in Texas

It is a sad fact that insurance companies will often go to the legal limit to delay or deny claims, but this is perhaps understandable; they are in the business of making money, not helping people. It is absurd when an insured is grateful for receiving payouts for a valid claim within a reasonable period; it is their right after all. But, that’s human nature, and when insurance companies deal fairly with their policyholders, they should be allowed to make profit from other people’s good fortune.

But when an insurance company acts in bad faith by delaying the processing or outright denying a legitimate claim, they are violating all manner of laws. In Texas, the state’s Insurance Code Title 5 deals with Deceptive, Unfair, and Prohibited Practices, and Chapter 542 in particular deals with Unfair Claim Settlement Practices. Dallas insurance bad faith lawyers will be particularly familiar with subchapter A, referred to as Unfair Claim Settlement Practices Act, which states that an insurer is in violation of the Code under the following conditions (§542.003):

(1) knowingly misrepresenting to a claimant pertinent facts or policy provisions relating to coverage at issue;

(2) failing to acknowledge with reasonable promptness pertinent communications relating to a claim arising under the insurer’s policy;

(3) failing to adopt and implement reasonable standards for the prompt investigation of claims arising under the insurer’s policies;

(4) not attempting in good faith to effect a prompt, fair, and equitable settlement of a claim submitted in which liability has become reasonably clear;

(5) compelling a policyholder to institute a suit to recover an amount due under a policy by offering substantially less than the amount ultimately recovered in a suit brought by the policyholder;

(6) failing to maintain the information required by Section 542.005; or

(7) committing another act the commissioner determines by rule constitutes an unfair claim settlement practice.”

If you have made a claim with an insurance company in Texas and experienced any of the above violations, you may have to file a lawsuit to get what you were entitled to in the first place. Consult with a knowledgeable insurance bad faith attorney in your area to get started.

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