April 17, 2025

How To Sue An Insurance Company For Bad Faith

If your insurance company unjustly denies, delays, or undervalues your legitimate claim, you have the legal right to file a bad faith lawsuit. Taking legal action can compel your insurer to fulfill its obligations and ensure you receive the compensation you’re rightfully owed.

Insurance companies are expected to act in good faith. However, sometimes they prioritize their financial interests over policyholders, leading to wrongful denials, unnecessary delays, and unjust settlement offers. Understanding how to take action can significantly improve your chances of achieving justice.

What Is an Insurance Bad Faith Action?

Insurance bad faith arises when your insurance provider violates its duty to fairly and promptly handle your claim. Every insurance policy carries an implied covenant of good faith and fair dealing. Violating this covenant—such as denying a claim without justification, excessively delaying payment, failing to thoroughly investigate claims, or misrepresenting policy terms—constitutes bad faith.

Common Examples of Bad Faith Practices:

Unreasonable denial or delay of claims without proper explanation.
Failure to conduct a thorough or timely investigation.
Offering settlements significantly lower than policy coverage warrants.
Misrepresenting coverage terms or deliberately misleading policyholders.
Refusing to pay claims clearly covered under the policy.
Engaging in coercive settlement tactics or threats.

Steps for Filing a Bad Faith Insurance Action

Taking organized and documented steps strengthens your bad faith claim. Here’s a recommended approach:

Step 1: Review Your Insurance Contract

Thoroughly examine your insurance policy, noting coverage, exclusions, and obligations.
Identify precisely which provisions apply to your claim to pinpoint potential breaches by the insurer.

Step 2: Maintain Detailed Documentation and Logs

Document every interaction with your insurer, including emails, phone conversations, letters, and meetings.
Collect supporting evidence such as photos, invoices, receipts, medical bills, and expert appraisals related to your claim.

Step 3: Document the Claim Denial or Delay

Request a detailed written explanation for any denial, delay, or lowball offer.
Keep copies of all communication clearly demonstrating the insurer’s unreasonable conduct.

Step 4: Make a Formal Final Demand

Send a detailed final demand letter clearly stating your grievances, wrongful actions by the insurer, and your expectations for resolution.
Allow a reasonable time (typically 30 days) for your insurer to rectify the situation.

Step 5: File a Complaint With Your State’s Department of Insurance

Submit a formal complaint to your state insurance department (such as the Texas Department of Insurance), detailing your insurer’s misconduct.
Regulatory oversight may prompt a faster resolution or official investigation.

Step 6: Consult With an Insurance Bad Faith Attorney

Engage an experienced insurance lawyer who can evaluate your claim, guide you through complexities, and determine the strongest legal strategy.
Your attorney will protect your rights and maximize your chances of success.

Step 7: Initiate a Bad Faith Lawsuit

If all negotiation attempts fail, your attorney will file a lawsuit against the insurance company in state or federal court.
Litigation requires the insurer to justify its actions publicly and in court, often leading to fair compensation.

Step 8: Consider Alternative Dispute Resolution

Explore mediation or arbitration as quicker and potentially less expensive alternatives to a full trial.
These processes can result in a negotiated resolution agreeable to both sides.

Step 9: Understand the Statute of Limitations

Be aware of your state’s statutes of limitations. In Texas, for example, you typically have two years from the date of the wrongful denial or discovery of misconduct to file your lawsuit.

Factors Considered in Bad Faith Claims

Several factors can influence the outcome of a bad faith insurance lawsuit. Key considerations courts often evaluate include:

Reasonableness of the Insurer’s Actions:
Courts examine whether the insurer acted reasonably under the circumstances, evaluating whether claim denial, delays, or settlement offers were justified based on evidence available at the time.
Severity of the Insurer’s Misconduct:
The more egregious or intentional the misconduct—such as knowingly misrepresenting policy details or actively deceiving policyholders—the stronger the bad faith claim.
Compliance With State Insurance Regulations:
Courts assess whether the insurer violated specific state laws or regulatory requirements. Violations of insurance codes (such as Texas Insurance Code Chapter 541 or 542) significantly bolster bad faith claims.
Documentation and Evidence:
Comprehensive documentation strengthens your claim, particularly clear evidence showing unreasonable denial, delay, or undervaluation of legitimate claims.
Impact of Bad Faith Actions:
Courts consider financial losses, emotional distress, and other harm caused to the policyholder due to the insurer’s wrongful actions.

The Importance of Hiring a Lawyer for Bad Faith Insurance Claims

Attempting to handle a bad faith insurance claim alone can be complex and overwhelming. Engaging an experienced insurance attorney significantly enhances your chance of achieving a favorable outcome. Here’s why professional legal representation is essential:

Expertise in Insurance Law:

Experienced lawyers understand complex insurance regulations, laws, and procedures.
Attorneys can accurately identify insurer misconduct and legal violations, strengthening your claim.

Effective Negotiation:

Skilled attorneys negotiate assertively with insurance companies to secure fair settlements, often without needing to go to court.

Comprehensive Documentation and Evidence Gathering:

Attorneys know precisely which documents and evidence will strengthen your claim.
They expertly assemble documentation that clearly establishes your insurer’s wrongdoing.

Courtroom Representation:

If necessary, an attorney can represent your interests in court, aggressively advocating on your behalf.
Legal representation demonstrates to insurers that you’re serious and fully prepared to pursue your rights.

Maximizing Compensation:

Attorneys understand the value of your claim, helping you pursue maximum compensation for damages such as financial loss, emotional distress, and potentially punitive damages for egregious misconduct.

Why Choose Callender Bowlin for Your Bad Faith Claim?

At Callender Bowlin, we specialize in fighting insurance bad faith and holding insurers accountable. Our reliable bad faith lawyers are dedicated to ensuring policyholders receive the respect, fairness, and full compensation they deserve.

Benefits of Partnering with Callender Bowlin:

Transparency: Clear explanations of your rights, the legal process, and expected outcomes.
Convenience: Comprehensive handling of documentation, evidence gathering, and negotiations.
Quality Representation: Proven track record in successfully resolving bad faith claims, combined with personalized advocacy to secure optimal results.

By trusting Callender Bowlin with your bad faith claim, you gain committed advocates who prioritize your interests above all else.

Contact Callender Bowlin Today

Don’t let your insurer’s wrongful denial, delay, or undervaluation go unchecked. If you suspect bad faith, the time to act is now.

Our legal team is here to address your questions, review your situation thoroughly, and provide clear guidance toward the justice and compensation you deserve.