What Damages Are Recoverable in a Bad Faith Insurance Case?

According to Chapter 541 and Chapter 542 of the Texas Insurance Code, when insurance companies adjust a customer's insurance claim, they owe the customer the common law and statutory duty of fair dealing and good faith, as well as a requirement to pay claims quickly. This means that insurers are legally compelled to treat you in a particular manner. Since the insurance has an inherent advantage over you, it must treat you fairly. If they break this legal obligation, it is said that they behaved in bad faith. When insurance companies act in bad faith, policyholders can launch a lawsuit for nearly every type of insurance, including property insurance, life insurance, and others.

If you prevail in a Texas insurance bad faith lawsuit, your damages may include the following:

If you can prove a willful or knowing infringement, you may recover up to three times the amount the insurer would have paid if your claim had been filed correctly
Interest, attorney's fees, and court costs
Interest-based penalties imposed by law for late payments
Punitive damages to punish the insurance company's misconduct.

Indemnity providers act in bad faith when they:

Counsel their insured against using a counsel
Change or terminate your insurance policy after filing a claim
Try to settle a claim for less than a reasonable person would consider reasonable
Delay payment following resolution of your claim
Without justification, the investigation of your claim is delayed
Without justification, defer the processing of your claim
Your claim is denied without an investigation
Deny your claim without offering a written justification that is reasonable
Without justification, unreasonable delay in the payment of a legal claim
Refuse to confirm receipt of a claim
Fail to investigate an allegation promptly and thoroughly
Fail to explain why a claim was refused
Failed to communicate with you in a fair manner
Fail to notify the insured of policy changes affecting a claim
When liability is relatively evident, failure to offer a claim settlement in a timely manner constitutes bad faith
Falsify claim information and/or policy language intentionally
Make payments without describing their significance
Offer a ridiculously low settlement and refuse to negotiate
Falsify Texas law to avoid legal responsibility
Falsify the amount of a claim
Request superfluous documentation
Require the insured to submit repeated forms containing the same information, using non-submission as a basis for refusal
Transferring your claim to multiple adjusters will delay payment
Withhold details on a claim
Falsely accuse the insured of fraud, arson, or other wrongdoing without adequate justification.

You and your attorney must demonstrate that the insurer is behaving in bad faith based on the facts surrounding your insurance claim. It might be extremely difficult to prove that an insurance company behaved in bad faith. It is crucial to consult a Texas attorney with experience in bad-faith insurance disputes for this reason.