Can I Sue an Insurance Company?
When an insurance company delays payment or processing of a valid claim in Texas, the law may provide you with the right to sue. Insurance companies are legally required to handle claims in a prompt and fair manner. If they take too long without a justifiable reason, it could be considered a violation of your rights as a policyholder and may be grounds for legal action under the Texas Insurance Code.
Texas Law on Claim Delays
Chapter 542 of the Texas Insurance Code's Prompt Payment of Claims Act makes it plain what deadlines insurers must meet. After a claim is lodged, insurance companies have 15 business days to confirm that they got it and start looking into it. They have 15 business days to either accept or refuse the claim after getting all the information they need. In some cases, this deadline can be pushed out by 45 days, but the corporation must provide a letter stating why they need additional time. The delay may be illegal if they don't meet these conditions.
When Delays Become Grounds for a Lawsuit
If an insurer misses deadlines, refuses to communicate, or continuously stalls the process without a valid explanation, it may be acting in bad faith. Bad faith occurs when an insurer knowingly withholds payment or fails to meet obligations under the policy. You may have grounds to sue the company for breach of contract, bad faith, or violations of the Texas Deceptive Trade Practices Act. Before you can file a lawsuit, however, you must first provide the insurer with a 60-day written notice of your complaint, giving them the opportunity to resolve the issue.
What You Can Recover
If your lawsuit is successful, you may be entitled to the full value of your claim, interest penalties, and attorney's fees. Texas law allows for 18 percent annual interest on delayed claim payments, in addition to the amount originally owed. In some cases, especially when bad faith is proven, the court may also award additional damages to compensate for stress or financial hardship caused by the delay.
Conclusion
You absolutely can sue an insurance company in Texas for taking too long to handle your claim, provided that the delay violates the state's prompt payment laws or involves bad faith conduct. If you believe your insurer is unfairly delaying your claim, you should document all communication, file a complaint with the Texas Department of Insurance, and consult an attorney to explore your legal options.