Examples of Auto Insurance Bad Faith

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In a car insurance claim, the insurance company usually pushes the boundaries of acceptable conduct. If they take it too far, they can be liable to you for their actions. The Houston bad faith insurance lawyers at Haun Mena can stand up for you when the car insurance company tries to steamroll over you.

Texas Has Multiple Routes to a Bad Faith Case Against an Insurance Company

In Texas, there are two different ways that you can take action against an insurance company for bad faith. The first is under common law. When you have an insurance policy, you have entered into a contract with the insurance company. Every party to a contract has a duty to act in good faith. In legal terms, this duty means that each party must act in the spirit of the contract.

When the insurance company uses delaying tactics and acts dishonestly, it can violate the common law good faith standard. According to a decision from the Texas Supreme Court, the common law bad faith action still exists, even though the state has since passed a bad faith statute.

Auto Insurance Bad Faith Usually Involves Extreme Conduct

The Supreme Court explained that not everything could be considered bad faith. Their conduct must rise to the level of being “egregious” for the insurance company to be liable. Not only do you have the burden of proof, but there is a high bar for you to meet. Usually, the insurance company will need to act intentionally or with extreme negligence.

The second way to prove bad faith is under a specific state law. Chapter 541 of the Texas Insurance Code sets out unfair and deceptive trade practices that can make an insurance company liable for damages.

Examples of Bad Faith Under Texas Law

The law is very specific about what can be considered bad faith by the car insurance company. Areas that are covered by the law include:

  • Failing to promptly offer a settlement when the insurance company’s liability has become reasonably clear

  • Failing to provide a prompt explanation for denying a claim

  • Refusing to pay a claim without conducting a reasonable investigation concerning the claim

  • Making a misrepresentation about the terms of the policy (insurance companies often deny Claims on the basis of policy restrictions or language that simply do not exist)

  • Failing to acknowledge with reasonable promptness pertinent communications relating to a claim arising under the insurer’s policy

Insurance companies have an obligation to act promptly, and they often ride the line in responding to claims. Some insurance companies have been known to take as long as six months to respond to demand letters. Section 542 of the Texas Insurance Code requires insurance companies to act “promptly” to investigate claims and respond to claimants.

Bad Faith Depends on the Circumstances of Your Claim

In a bad faith claim against an auto insurance company, the question is when the insurance company has crossed the line. The statute does not give any specific timetables that the insurance company must follow.

In general, parties are presumed to act in good faith unless specific evidence to the contrary can be shown. For example, if the adjuster speaks to you over the phone and denies your claim without further investigation, it may be considered bad faith. Similarly, denying a claim entirely based on policy language that never existed in the first place can also make an insurance company liable.

Hire a Lawyer to Hold the Insurance Company Accountable

Insurance companies are much more likely to engage in these behaviors when they see that you are not represented by a lawyer. In their estimation, you are far less likely to know that they are breaking the law, and they are far more likely to get away with their conduct.

A bad faith claim is a lawsuit against the insurance company for how the claim was handled, as opposed to a case against the person who caused your personal injury damages.

If you can win a bad faith case against an insurance company, you can get a variety of damages that specifically relate to the insurance company’s conduct.

Here are the possible damages in a bad faith case:

  • Up to three times what the insurance company will have paid for your claim itself (if they acted intentionally)

  • Mental anguish for the emotional injuries that you suffered as a result of the insurance company’s conduct

  • Punitive damages against the insurance company for extreme conduct

  • Attorney’s fees, court costs, and interest

Contact a Houston Personal Injury Attorney Today to File an Auto Insurance Bad Faith Claim

Haun Mena is your first line of defense against questionable auto insurance company tactics when you have filed a claim. We will not hesitate to file an auto insurance bad faith claim on your behalf if necessary. First, you need to speak with an experienced personal injury lawyer. You can schedule an initial consultation by sending us a message online or calling us today at (713) 874-9216.

Auto Insurance Bad Faith FAQs

How much is my car insurance bad faith case worth?

Everything depends on the value of your original claim and the egregiousness of the insurance company’s conduct.

Should I sue under common law or the Texas statute?

Your attorney will likely recommend that you sue under both theories because they largely overlap. You can win on both claims.

Will a bad faith claim against the insurance company settle?

There is a chance that your claim can settle if the insurance company realizes the trouble that it may be in if your case goes to a jury.


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