Insurance is meant to provide financial security and peace of mind. But when the insurance company doesn’t fairly pay a claim, it doesn’t work that way. What is meant to be a safety net can become a source of stress and even financial loss.
When the insurance company uses deceptive, unfair, and prohibitive practices to avoid honoring claims, they may be said to be acting in bad faith.
Fighting Insurance Bad Faith
If you are the victim of bad faith, you have legal rights. You may challenge the insurance company’s bad faith by bringing a legal claim. The claim may provide you with compensation.
Valuing Your Bad Faith Insurance Claim
Once you know you can take legal action, you need to know what to expect. Understanding the potential value of the claim gives you clear expectations for the journey ahead.
Are all bad faith claims worth the same amount?
No. The amount you can receive for your bad faith claim is unique to your losses and damages. Texas law lists the types of damages that you can receive. You claim the damages that apply to you in the amounts that apply to you.
The Haun Mena legal team holds insurance companies accountable. We will discuss the potential value of bad faith insurance claims.
The best way to know the potential value of your bad faith insurance claim is to have a consultation with the Haun Mena legal team. Their team of Texas lawyers represents individuals and businesses in claims against insurance companies. Call today for a personalized consultation about your case and the potential value of any claim.
What Is the Value of My Bad Faith Insurance Claim?
The worth of your bad faith insurance claim is tied to the following factors:
- Amounts that should have been paid in benefits
- Independent injury that results from the non-payment
- Penalties and Interest
- Attorney’s fees
- Court costs
- Treble (triple) damages (rarely awarded)
How Is the Value of My Bad Faith Insurance Claim Determined?
At the core of a determination of any bad faith insurance claim is your damages. What have you lost because of the insurance company’s failures?
Have you lost the value of insurance benefits you deserved? That is part of your damages. Have you incurred additional losses because the insurance company didn’t pay? These are your actual damages.
Texas law allows you to claim your actual damages. Upon a showing that the insurance company knowingly acted in bad faith, the plaintiff may be awarded up to three times actual damages.
Many policyholders who have not read their insurance policy believe everything is covered. It is critical that you review your entire insurance policy, including all of the limitations, exclusions and endorsements, before you attempt to calculate the value of your loss. Submitting a claim with incorrect or improper valuations can ultimately cost you money if those losses are excluded are limited by your policy.
Attorney’s fees in Texas for bad faith insurance claims
In addition to damages, you may claim attorney’s fees in Texas bad faith insurance claims. Attorney fees are allowed to make it possible for the plaintiff to personally receive the total amount of their loss, after paying their attorneys. It wouldn’t be very fair if your damages were essentially erased by the cost of bringing the legal action.
Texas law allows for the recovery of attorney’s fees using two different methods. The first is to establish that your insurance company breached its contract with you. While this sounds like a simple task, a policyholder must establish not only that they experienced a loss covered by the policy, but also that none of the policy’s exclusions apply. Second, a policyholder can recover attorney’s fees by showing that an insurer breached specific laws found in the Texas Insurance Code.
These codes generally require that an insurance company handle your claim timely and treat you fairly. The lawyers at Haun Mena can walk you through this process if you believe you have a bad faith claim.
Interest for bad faith insurance victims
A plaintiff may receive interest on their compensation for bad faith insurance damages. Depending on the type of claim you have, your rights to collect penalties and interest will vary. In 2017, the Texas legislature passed new laws reducing the amount of interest available to a “bad faith” claimant in a weather claim to 10% annually. However, if your claim falls under the old law, interest is calculated at 18% per year, plus pre-judgment interest of 5% while a lawsuit is pending.
Court costs may be awarded to a successful plaintiff in a bad faith insurance claim. These are costs incurred by the plaintiff to bring the claim to court.
Punitive damages in bad faith insurance claims
Though rarely awarded, it may be possible for the value of a bad faith insurance claim to include punitive damages. Chapter 541 of the Texas Insurance Code allows for the recover of extra damages against an insurance company who acts “knowingly” or “intentionally” in violating provisions of the Texas Insurance Code.
If a policyholder can prove knowing or intentional conduct, he or she may recover up to three times their actual damages from the insurance company. It is important to understand that there are many exceptions and defenses to treble damages, and they are rarely upheld on appeal. However, with the correct legal guidance, these damages may be recoverable in the right case.
Can pain and suffering be awarded as damages for a bad faith insurance claim?
Yes. Pain and suffering can be awarded as damages for a bad faith insurance claim. Pain and suffering and mental anguish must be egregious to qualify for this type of damage.
If you’re counting on an insurance payment, and it doesn’t arrive, it’s incredibly distressing. It isn’t hard to imagine how an unreasonable denial of payment would cause mental anguish. However, the legal standards for recovering these damages are very high. Our lawyers can help you evaluate pain and suffering and how it would be valued.
Determining the Value of Your Bad Faith Insurance Claim
Ultimately, understanding the value of your bad faith insurance claim isn’t quite as simple as totaling all the damages that may apply. The exact value of any case is complex, based on various factors. The strength of the case and the clarity of damages are just a few things that may play a role.
Our lawyers can provide you with a range of what your case is likely worth and the reasons for our opinion. We explain what is involved in getting the compensation you deserve and our role as your lawyers in helping you achieve justice. Contact us today for an evaluation.
Texas Insurance Code Chapter 541 vs. Chapter 542
In Texas law, both Chapters 541 and Chapter 542 have to do with insurance companies failing to pay claims. However, they are separate and distinct chapters of law. The remedies under each chapter are different.
Chapter 542 provides guidelines for the insurance company to investigate and process their claims. An insurance company may fail to timely investigate and pay without acting in bad faith. There are still available remedies when this occurs, but they are different from bad faith damages.
Under Texas Insurance Code § 542.060, liability for a violation of the subchapter may result in 18% interest on the claim as well as payment of attorney fees. To have a claim under Chapter 542, the person must have a right to compensation. In 2017, the law changed when a claim arises from weather losses. Under that new law, the percentage interest an insurance company owes for delaying payment of a valid claim was reduced from 18% annually to 10% annually. However, claimants may still be able to recover attorney’s fees and other potential damages, on top of the interest available under both the old and new statutes.
Changing Texas laws also increased the requirements that a policyholder must meet before suit may be filed against an insurance company for bad faith. Under the new law, Chapter 542A of the Texas Insurance Code requires a policyholder to send notice to the insurance company 60 days before filing suit. It is imperative that a policyholder understand the requirements of this new law before attempting to provide notice to an insurance company, as your rights could be negatively affected if notice is not provided properly and the correct legal requirements are not met.
No double recovery
Double recovery is not permitted if a person has a right to compensation under Chapters 541 and 542. A person cannot double recover for both contractual and bad faith damages.
Legal Consultation for the Value of a Bad Faith Insurance Claim
Our lawyers can give you a legal consultation about the value of a bad faith insurance claim. We offer personalized consultations and legal representation to hold the insurance companies accountable. Contact us today to start your case.
USAA v. Menchacha, No. 14-0721 (Tex. 2017)
Texas Civil Practices and Remedies Code § 41.008 – Punitive damages
Texas Insurance Code § 541.060 – Unfair settlement practices
Texas Insurance Code § 541.151 – Private action for damages
Texas Insurance Code § 541.152 – Actual damages, court costs, and other damages
Texas Insurance Code § 542.060 – Liability for violation of insurance claims guidance