Texas Insurance Law is Slanted Heavily in Favor of Insurance Carriers. You Need All the Help You Can Get.
Insurance carriers exist to make money for their executives and shareholders…not to make sure injured victims are adequately compensated for their losses. They often attempt to delay or deny even undisputed liability claims. The State of Texas, unfortunately, primarily protects the rights of these big insurance companies over those of its citizens.
Remember: Texas Insurance Law favors insurance carriers – not injury victims. It is still important, however, to know your legal rights and what (if any) duties the insurance company may owe you in regards to your claim.
The duties (if any) that an insurance company owes you are dictated by whether the claim you are making is a third-party claim or first-party claim. Generally, only first-party insurance carriers owe you legal duties.
Q: What is a first-party insurance claim?
A: A first-party insurance claim is a claim filed with your own insurance company.
Q: What is a third-party insurance claim?
A: A third-party insurance claim is a claim filed with the insurance carrier for the at-fault party or parties responsible for your injuries.
Remember: You can have a third-party claim and first-party claim with the same insurance carrier. For example, say you are injured in a motor vehicle collision and both you and the at-fault driver are insured by Farmers. You would file a third-party liability claim with Farmers and – if you carried underinsured motorist coverage on your own policy – could file a first-party claim with Farmers under your own policy.
Q: Why does it matter if a claim is a first-party claim or third-party claim?
A: The type of claim dictates what duties (if any) the insurance carrier owes you.
Remember: A third-party insurance carrier owes you no legal duties. They can attempt to delay and deny your claim all they want. Your sole recourse if you cannot agree on a settlement is to file a lawsuit against the at-faulty party (not the insurance company itself).
Q: Are you owed any legal duties by the third-party insurance carrier?
A: None at all. A third-party insurance carrier can tell you to get lost. They can make you a lowball offer. They can deny liability. They don’t have to timely return calls or respond to written correspondence. They owe you nothing.
Q: Are you owed any legal duties by a first-party insurance carrier?
A: Absolutely. Your own insurance company owes you duties of good faith and fair dealing. After all, you pay your insurance company money every month for coverage. They must timely respond to written correspondence and fairly adjust your claim. If your insurance carrier does not exercise good faith and fair dealing you can file a lawsuit against the carrier directly.
An Example: You are riding a motorcycle and have underinsured motorist coverage through Progressive. A senior citizen – insured by Allstate – fails to yield the right of way and collides with your bike causing you to break both legs. The senior citizen has a minimum limits policy of $30,000.00. You would file a third-party claim with Allstate due to the senior citizen’s negligence. Allstate owes you no legal duties. If Allstate refused to pay the policy limits your sole recourse would be filing a lawsuit against the senior citizen. If Allstate offered to tender policy limits you could file a first-party underinsured motorist claim with Progressive. Progressive would owe you duties of good faith and fair dealing. If Progressive refused to tender the policy limits you paid for your recourse would be filing a lawsuit against Progressive directly.
How We Can Help You: Our firm demands that first-party insurance carriers comply with the Texas Insurance Code and monitors for violations of the Texas Deceptive Trade Practices Act. Bad faith lawsuits against insurance carriers often hinge on correspondence sent to and received from the respective carrier.
Q: What causes of action might you have against your own insurance carrier if they made a bad offer on your claim or refused to make an offer whatsoever?
A: You might have a cause of action for unfair or deceptive insurance practices against your own insurance carrier.
The Texas Insurance Code, chapter 541, provides a private cause of action for unfair or deceptive insurance practices. Great Am. Ins. Co. v. North Austin MUD, 908 S.W.2d 415, 420 (Tex.1995). The elements of a cause of action under the Texas Insurance Code chapter 541 are the following:
- The plaintiff is a “person” as defined by the Texas Insurance Code section 541.002(2);
- The defendant is a “person” as defined by the Texas Insurance Code section 541.002(2);
- The defendant engaged in an act or practice that violated:
- Texas Insurance Code chapter 541, subchapter B, or
- Texas Business & Commerce Code section 17.46(b) and the plaintiff relied on the act or practice to its detriment, or
- A tie-in provision of the Texas Insurance Code; and
- The defendant’s act or practice was a producing cause of actual damages.
Unfair settlement practices section 541.060 of the Texas Insurance Code is found under subchapter B. Specifically, section 541.060(a)(3) provides a private cause of action for an insured against their insurer for “not promptly giving a policyholder a reasonable explanation, based on the policy as it related to the facts or applicable law, for the insurer’s denial of a claim or for the offer of a compromise settlement claim.”
How We Can Help You: Our firm demands first-party insurance carriers to – Pursuant to section 541.060(a)(3) of the Texas Insurance Code – promptly apply the specific facts (not general facts) of your case to the policy language regarding each area of damages you are legally entitled to.
Contact us for a free consultation to discuss the specifics of your case with our insurance lawyers in Dallas, Plano and Fort Worth, and find out how we can help you today!