Insurance is supposed to provide peace of mind knowing the things that are most important to us, including health, property, and so forth are protected in the case of an unfortunate event. While insurance companies have the right to investigate the legitimacy of claims, many carriers use strategic bad faith tactics to avoid paying them. That is because insurance companies are first and foremost a business, so they are never in a rush to subtract money from the bottom line. All too often companies make conscious decisions to place the company’s profitability ahead of its obligation to protect the people and businesses it insures, especially those that will leave the insurance company liable to a large payout amount. Some common bad faith tactics include:

  • Causing unnecessary delays throughout the claims process
  • Failing to confirm or deny coverage in a reasonable period of time
  • Hiring biased third parties to handle portions of the claims process
  • Making threatening statements
  • Misrepresenting the law
  • Misrepresenting the terms of an insurance policy by stating some items are not covered when in fact they are, as well as failing to disclose policy limitations
  • Offering less money than a claim is worth
  • Performing haphazard investigations of property damage and other insurance claims
  • Refusing reasonable requests for documentation
  • Undervaluing claims
  • Wrongfully claiming damage is due to inadequate maintenance
  • Wrongfully claiming damage is due to normal wear and tear

At Roberts Markland LLP we understand these tactics have devastating financial consequences. That is why it’s important to take every precaution when pursuing a bad faith claim. Below are preliminary steps we suggest are taken prior to filing a lawsuit against your insurance company.

Step 1: Review Your Insurance Contract

An insurance policy is a contract between you and the insurer. Before you can file a bad faith lawsuit, you need to know if there’s been a violation of your contract and make certain your claim is covered under the terms of your contract.

Step 2: Keep Logs on Your Claim

Keeping a log helps prove the validity of the insurance company’s ‘bad faith’. If the insurance company simply makes a mistake and has not acted in bad faith, the proper remedy is only to pay your claim, however, if the insurance company acts particularly egregious, a jury may award additional damages to you as well the full claim amount covered under your policy. This is done to punish the insurance company for its wrongdoing and to discourage it from acting in bad faith with other policyholders. Documents and evidence can include photos provided to the insurance company, reports, receipts, estimates, and correspondence such as calls and meetings with the insurance company. It’s important to log as many details as you can in the correspondence, including the date, the names of individuals involved, and what was generally discussed.

Step 3: Document Denial of Claim

If your claim is denied, request that a supervisor at the insurance company review the claim and denial. If the denial is not reversed, consider appealing to the Texas insurance regulatory agency, which is a state office charged with reviewing contested insurance claims. It is possible that during the review process with the agency, your insurer will reconsider their denial of coverage.

Step 4: Make a Final Demand

The court will want to see that you made all reasonable efforts to settle your claim before filing a lawsuit. In your demand letter, detail your claim, the action you demand, and advise them you will seek a bad faith claim against them if they do not respond and/or comply. Make sure to get proof by using a return receipt and/or certified mail. The insurer has between 15 to 60 days from when you made a demand to pay that claim, you do not have a valid lawsuit for ‘bad faith’ before the time allowed for the insurer to respond has passed.

If the insurance company does not heed to your final demand, you may have a bad faith lawsuit against your insurance company. In this case, we’ll pursue damages three times your original claim (known as “treble damages”), and fight on your behalf to prove the insurer knowingly violated Chapter 541 of the Texas Insurance Code. For example, in addition to paying the full cost of damages, an insurer may also be required to pay for the following:

  • Statutory Penalties
  • Statutory Interest
  • Liability for Judgments in Excess of Policy Limits
  • Attorneys Fees
  • Emotional Distress
  • Economic Loss
  • Punitive Damages
  • Court costs and reasonable attorneys’ fees
  • Any other relief the court deems proper

Pursing a claim by yourself can be an uphill battle. Seeking counsel with us immediately can protect your rights as a policyholder and ensure you are rewarded every single penny you are owed. Contact us as soon as you suspect your insurance company is acting in ‘bad faith.” Our experienced attorneys have a track record of success and take pride in fighting for you every step of the way. Call us today for a free evaluation of your case.