Breach of the Duty of Good Faith and Fair Dealing
Texas law regarding insurance claims requires insurance companies to act in good faith and deal fairly with their clients when evaluating claims. If the insurance company fails in this regard, the insured might have a basis for a lawsuit against them for acting in “bad faith.” A bad faith claim arises when an insurer,
- Has no reasonable basis for denying or delaying the payment of a claim, and
- Knew or should have known that there was no reasonable basis for the delay.
This type of claim often arises when adjusters routinely deny a legitimate insurance claim or intentionally delay or under-estimate the damages. Often they give the runaround to claimants to try to save money. Bad faith by insurance adjusters can have devastating consequences – especially following sever damages to a home following a catastrophic event. Catastrophic events – especially hurricanes – are a constant threat in Houston and the entire gulf coast. If a legitimate homeowner claim is denied or delayed following a fire, flood, hurricane, storm or other major event, the homeowner needs immediate relief under their insurance policy to make repairs. Shady actions by insurance company adjusters can result in financial losses, foreclosure, illness and increased expenses. Furthermore, the emotional distress caused by the losses and financial strain can be sever. That is why the law provides for damages claims against the insurance company causing the pain.
Damages for Breach of the Duty
When an insurance company does not reasonably handle a claim and breaches the duty of good faith and fair dealing, the insured can sue the company for damages that are similar to other lawsuits. For instance, a guilty insurance company can be ordered to pay:
- Mental Anguish Damages
- Damages for Ruined Credit
- Loss of Business Revenue
- Damages for Physical Injury
- Punitive Damages
These types of damages are available to folks who have suffered due to the unreasonable denial or delay of the claim, not as a result of the damage which is the subject of the original claim. When you have a large claim such as a home damaged in a storm or hurricane, it is important to understand that you do not have to accept the estimate provided by the adjuster on the scene. The are not there to do you any favors. When you have been paying insurance premiums for months or years, it has been because you might need to make a claim at some point. When that time comes, make sure the insurance company lives up to their obligations.
If you have been the subject of abuses by your own insurance company, contact Michael P. Fleming for a free no-obligation consultation.