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What Is a Bad-Faith Insurance Claim?

Are you a Houston, TX resident asking yourself, “How can I find a personal injury lawyer near me?” Do you believe you might have grounds for a bad-faith insurance claim? Recovering from an accident is difficult enough without having to deal with an insurance company that refuses to honor its contractual obligations. Here is some information on what constitutes bad faith and how you can find a lawyer who will help you review your legal options:

What Is a Bad-Faith Insurance Claim?

An insurance company is considered to have acted in bad faith if it deliberately took action to avoid paying a legitimate claim, or if it knowingly underpaid a claim. Any time an insurance company denies a claim, they must provide a valid reason. A bad-faith insurance claim is a claim that is filed by the insured to seek damages against an insurance company that acted in bad faith. This type of claim often involves:

  • Life insurance
  • Auto insurance
  • Home insurance

Examples of Bad Faith

If an insurance company refuses to conduct a legitimate investigation into a claim, deliberately causes unnecessary delays, or refuses to acknowledge receipt of a claim, their actions constitute bad faith. Ignoring evidence in the claimant’s favor or putting undue emphasis on evidence against the legitimacy of the claim are also examples of bad faith. Other ways in which an insurance company might renege on its obligations include misrepresenting contractual language or requesting unnecessary documentation from the claimant.

These are just some examples of how an insurance company might act in bad faith. The language of unfair claims practices acts, which regulate bad-faith claims, often includes words like “reasonable,” “intentional,” and “wrongly.” These terms are highly subjective. If you are wondering whether or not you have a valid bad-faith claim, a lawyer who specializes in the legislation pertaining to insurance policies can help you assess your grounds.

What Bad Faith Is Not

Simply denying a claim does not necessarily constitute bad faith on the part of the insurance company. If the adjuster finds legitimate reasons to invalidate a claim, the insurance company is not contractually obligated to issue a payout. Similarly, making an error during the investigation which causes the claim to be invalidated does not constitute bad faith. When pursuing a bad-faith claim, you must provide evidence that the insurance company acted deliberately.

What Damages Can You Seek If You Have Grounds for a Bad-Faith Claim?

When you sign up for an insurance policy, you trust that your provider will issue a payout after an automobile accident or another event that meets the requirements outlined in the contract. Refusing to honor valid claims leaves the insured without the resources necessary to recover from their injury, such as money for medical expenses. The insured must then incur the additional inconvenience of filing a bad-faith claim after already taking the time to pursue their personal injury claim.

If you can prove that you were denied a fair payout as a result of bad faith, the insurance company may be required to pay you up to three times the amount they initially owed. Additionally, they may be held accountable for compensating:

  • The stress you experienced
  • The lost wages you incurred while pursing your bad-faith claim
  • Your legal fees
  • Any applicable court fees

Can a Bad-Faith Claim Result in Punitive Damages?

In theory, an insurance company that acts in bad faith might be required to pay punitive damages on top of compensating the insured’s losses. Punitive damages are intended to punish particularly egregious violations of the law. They are also called exemplary damages because they are meant to dissuade other parties from committing similar crimes in the future. While punitive damages are rarely awarded in bad-faith cases, the law does technically allow for them.

How Can You Provide Evidence In Support of Your Bad-Faith Claim?

In court, the insurance company is assumed to have acted appropriately until the insured submits evidence of bad faith. Therefore, the burden of proof is on you, the insured. In the case of a common law bad-faith claim, you must show that the insurance company denied a payout despite strong evidence of your claim’s validity. In a statutory bad-faith case, you must show that the insurance company used deceptive tactics when issuing your policy or investigating your claim.

Keeping records of your correspondence with the insurance company is one of the most important ways to amass evidence of bad faith. Be sure to save copies of your policies and any letters or emails from your insurance provider. When communicating about the accident, you can request that your exchanges with representatives of the insurance company happen in writing. Additionally, all of the evidence showing the validity of your initial claim can be used to support the bad faith claim.

How Does the Claim Submission Process Normally Work?

Most people who are injured in car accidents, premises liability accidents, or third-party, work-related accidents are able to resolve their claims without running into bad-faith issues. Having a qualified attorney increases the chances that the insurance company will take your claim seriously and can help dissuade them from using manipulative tactics. Texas is an at-fault state, meaning that after most accidents, damages are usually covered by the negligent party’s insurance company.

How to Submit a Claim

To seek damages in an accident that wasn’t your fault, your lawyer will likely instruct you to begin by sending a demand letter and filing a claim against the at-fault party’s insurance company. The insurance company will then have 15 days to acknowledge receipt of the claim and another 15 days to issue a verdict.

Any efforts to create unnecessary delays can result in allegations of bad faith by the insurance company. Once the insurance company approves a claim, it is responsible for issuing a payout in a reasonable amount of time.

Getting the Full Value of Your Claim

If the insurance company undervalues your claim or presents evidence against you, your lawyer can negotiate with them on your behalf. Skillful negotiating can often result in your settlement offer being increased and your claim resolving outside of court. Going to trial over your claim is usually a last resort.

Schedule a Free Consultation in Houston, TX

Whether you need to file an initial accident claim with an insurance company or hold a policy provider accountable for bad faith, a qualified personal injury lawyer can help you leverage the protections offered by Texas law. We offer free consultations, during which we will take an initial look into your claim and review your legal options. During the consultation, you can ask us anything you need to know about exercising your legal right to fair compensation.

Where Can I Find a Personal Injury Lawyer Near Me?

Our personal injury lawyers are highly experienced in all matters related to insurance claims. By providing top-quality legal representation, we aim to help you hold the negligent party responsible while making sure their insurance company honors all of the contractual obligations that are relevant to your claim. To speak with our attorneys, contact Houston Injury Lawyers PLLC.

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