About Insurance Bad Faith Cases
Texas Law is Slanted Heavily in Favor of Carriers. Let Our Dallas Bad Faith Insurance Lawyers Help.
Insurance companies exist to make money for their executives and shareholders, not to make sure injured victims are adequately compensated for their losses.
Insurance companies 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.
Texas Insurance Law favors insurance companies, 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.
- First-Party vs. Third-Party Claims
- Legal Duties Owed in a First-Party Claim (UM/UIM)
- Filing a Lawsuit Against Your Own Insurance Company
What does “bad faith” mean?
“Bad faith” is a technical legal term that simply means an insurance company denies or minimizes your claim with no reasonable basis. However, they can attempt to get away with this by claiming it was a mistake in their assessment process.
There is a counter to their deviousness, though. Texas is one state that allows you to seek punitive damages in “bad faith” insurance cases. That provides a financial incentive for insurance companies not to engage in bad behavior.
How do you know if bad faith has been committed by your insurance carrier?
Make no mistake about it – insurers like to behave badly to get your money. Learn what to do if you suspect foul play.
Unfortunately – and this is the reality – Texas law favors insurance companies and not you.
And would you believe you have it comparatively good here in Texas? Over the years, the insurance industry has lobbied to ensure no federal agency oversees their industry’s actions. The authority currently only comes from the state level.
What actions may constitute “bad faith?”
“Bad faith” isn’t simple or straightforward. It’s hard to prove in court. However, if you experience any of the following, you may have experienced “bad faith” actions from the insurance company:
- An automatic coverage denial with no initial investigation
- Misquoting the Texas statute of limitations to either delay or deny your claim
- Changing adjusters simply to delay your claim
- Refusing to investigate your claim entirely
- Not giving you a written statement of the reasons they’re denying your claim
- Not paying or denying your claim within a reasonable time period
- Citing laws improperly to deny or minimize the value of your claim
- Improperly quoting legal terms, or blatantly using false ones, to deny or minimize your claim
- The insurer attempts to settle a claim for much less than the amount a reasonable person would have believed they were entitled to, and any similar actions that require the insured party to use litigation
- Lowballing the true value of an insured loss
- Using arbitrary or subjective measures to reduce the full value of the claim
- Cancelling a policy where the insured person was not at fault
- Using extreme personal persecution to victimize or intimidate claimants into not pursuing their claims
- Knowingly telling a plaintiff, their attorney, or DOI examiner an investigation is going on when in fact it is not
- Misusing the judicial court system to delay or settle a claim where liability is clear and reasonable
- Threatening to take legal action against an insured person to stop having to make payment on a long-term basis (such as the case of disability or worker’s compensation)
There’s a much longer list of actions that qualify as “bad faith.” Basically, if you’re suspicious of the way your personal injury case is going, contact a lawyer. They offer free consultations, so you risk nothing finding out if your insurer is acting in “bad faith.”
First-Party vs. Third-Party Claims
What is a first-party insurance claim?
A first-party insurance claim is one filed with your own insurance company.
What is a third-party insurance claim?
A third-party insurance claim is one filed with the insurance carrier for the at-fault party or parties responsible for your injuries.
Can you have a third-party claim and first-party claim with the same insurance carrier?
Yes. For example, say you are injured in an auto accident 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, you could file a first-party claim with Farmers under your own policy.
Why does it matter if a claim is a first-party claim or third-party claim?
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 carrier itself).
Legal Duties Owed in a First-Party Claim (UM/UIM)
Are you owed any legal duties by the third-party insurance carrier?
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.
Are you owed any legal duties by a first-party insurance carrier?
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 personal injury 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.
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 Can Our Dallas Bad Faith Attorneys Help?
Our lawyers demand 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.
Filing a Lawsuit Against Your Own Insurance Company
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?
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 Can Our Insurance Bad Faith Attorneys Help?
We demand 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.
Get a free consultation today with Mullen & Mullen Law Firm to find out if you have a legitimate bad faith case.
We have locations in Dallas, Plano, Frisco, and Fort Worth to best serve North Texas residents.
Call (214) 747-5240 now or use the contact form or chat feature on this page.
There is never a fee for our legal services unless we obtain a recovery for you.
Shane V. Mullen is an attorney licensed by the State of Texas for the general practice of law, and the Managing Partner at Mullen & Mullen Law Firm in Dallas, TX. His firm focuses exclusively on personal injury law and has been in business for 40 years. Before becoming a lawyer, Shane worked for his father as an accident injury claims investigator.