April 17, 2025
Establishing Bad Faith Insurance Practices in Texas
In Texas, establishing bad faith insurance practices involves proving that an insurer acted unreasonably or unfairly by denying, delaying, or underpaying a valid claim when it was reasonably clear the insurer was liable. Policyholders can pursue such claims through two primary legal avenues: common law and statutory claims.
Common Law Bad Faith in Texas
Unreasonable Denial or Delay
Common law bad faith is established when an insurer unreasonably delays or denies a claim that clearly should be covered under the policy. This involves situations where an insurer knows or reasonably should know that it is liable but deliberately refuses or stalls payment.
Knowledge or Should-Have-Known Standard
Claimants must demonstrate that the insurer had knowledge—or reasonably should have had knowledge—of their clear liability. Evidence includes internal communications, adjuster notes, and industry-standard claims-handling practices.
Statutory Bad Faith Under Texas Insurance Code
Texas Insurance Code Chapter 541 specifically outlines unfair or deceptive acts and practices that constitute bad faith, including:
- Misrepresenting Material Facts or Policy Provisions: Insurers deliberately providing false or misleading information regarding policy coverage or terms.
- Failing to Attempt a Good Faith Settlement: When the insurer refuses to fairly settle claims where liability is apparent.
- Delaying or Failing to Provide Explanation: Insurers who delay or fail to explain clearly why a claim has been denied or partially paid.
- Other Deceptive Practices: Engaging in tactics explicitly defined as unfair or deceptive under Chapter 541.
Steps to Establish a Bad Faith Claim in Texas
Proving Benefits Were Unfairly Withheld
You must show that benefits due under the policy were unjustifiably denied, delayed, or inadequately paid.
Demonstrating Unreasonableness
The insurer’s actions must be proven unreasonable and unjustified given the circumstances and standard practices in the insurance industry.
Evidence Needed to Support a Bad Faith Claim
- Claim Documentation: Maintain all correspondence, policy documents, and claim forms.
- Insurer Communication: Collect emails, letters, and recorded conversations showing the insurer’s inappropriate handling.
- Expert Witnesses: Often, testimony from industry experts is necessary to establish standard practices and how the insurer deviated from them.
Legal Remedies and Potential Damages
Successful bad faith claims in Texas can result in significant financial remedies:
- Actual Damages: Compensation covering the claim amount originally due.
- Punitive Damages: Monetary penalties intended to punish egregious misconduct.
- Attorney Fees: Legal costs incurred in pursuing the bad faith claim.
Why Choose Callender Bowlin?
At Callender Bowlin, we understand how devastating dealing with insurance disputes can be. Our experienced bad faith insurance attorneys specialize in bad faith insurance litigation in Texas, offering clear, transparent communication and vigorous advocacy to hold insurers accountable. We deliver personalized legal strategies designed to secure the benefits and compensation you rightly deserve.
We stand out through our commitment to transparency, convenience, and high-quality service, ensuring you stay informed and confident every step of the way.
Take Action Today
If you believe your insurance company has acted in bad faith, don’t delay. Contact Callender Bowlin now for a consultation and let us evaluate your case. We’re here to answer your questions, clarify your options, and provide you with the exceptional legal support you deserve.
Reach out today and let us help you secure the justice you deserve.
