How to Win a Bad Faith Claim

Winning an insurance bad faith claim requires more than showing that an insurer denied or undervalued your claim. Generally, you need evidence demonstrating that the insurer failed to handle the claim fairly or violated its legal or contractual obligations. Because bad faith laws vary by state, the specific requirements depend on where the claim arose.

Understand Your Insurance Policy

Your policy is the foundation of any insurance dispute. Before challenging an insurer, identify the coverage that applies to your loss, relevant exclusions, deductibles, limits, and conditions for filing a claim.

A strong case begins with demonstrating that the insurer had an obligation to provide coverage or properly evaluate the claim under the policy.

Build a Strong Evidence File

Documentation can make a significant difference. Keep copies of your insurance policy, claim forms, photographs, videos, repair estimates, receipts, inspection reports, correspondence, emails, and text messages.

Also maintain a timeline showing when you reported the claim, when inspections occurred, what documents you submitted, and how long the insurer took to respond. This can help establish patterns of unreasonable delay or inadequate investigation.

Prove More Than a Disagreement

An insurer does not automatically act in bad faith simply because it disagrees with your valuation or denies your claim. Insurance companies can have legitimate coverage disputes. Instead, evidence should focus on the insurer's conduct. Did it ignore important evidence? Did it fail to investigate reasonably? Did it misrepresent policy provisions? Did it repeatedly delay the claim without a legitimate explanation? The stronger your evidence of unreasonable conduct, the stronger the potential bad-faith argument.

Challenge the Insurer's Decision

Ask the insurer for a written explanation of its decision and request the specific policy provisions supporting a denial or limitation of coverage. If the insurer's explanation conflicts with the policy language or available evidence, document those inconsistencies. You may also provide additional estimates, photographs, expert opinions, or other evidence supporting your position.

Understand Your State's Laws

Bad faith claims are governed by state law, and the available remedies can vary considerably. In Texas, for example, certain insurance practices may implicate provisions of the Texas Insurance Code, while contractual disputes can involve additional legal theories. Deadlines can also apply, so waiting too long to pursue a dispute can jeopardize your rights.

Consider Speaking With an Attorney

If negotiations fail or the insurer continues to mishandle your claim, an attorney experienced in insurance disputes can evaluate the evidence and determine whether you may have a viable bad-faith claim.

The goal is not simply to prove that the insurer made a mistake. A successful case generally requires connecting the insurer's conduct to specific legal or contractual obligations and demonstrating why that conduct was unreasonable under the circumstances.