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Knowing when an insurance company is acting in bad faith

Many Texas residents purchase insurance to help protect themselves and their families from any severe financial upheaval in the future. While many people don’t think about it initially, some insurance companies will deny paying out on claims or falsely mislead people about their current policies. Unfortunately, not all insurance companies have your best interest in mind, and it’s important for you to understand when you have a legal right to sue an insurance provider.

Bad faith insurance

There are many different incidences that fall into the broad category of insurance bad faith. When these events happen, you have the legal right to file a lawsuit against the insurance provider. It’s always a good idea to contact an attorney if you believe that you have a case to sue an insurance company before doing so.

When you sue an insurance company because of their bad faith, it falls underneath the Unfair Claims Practices Acts in your state. Your insurance company is typically held liable for both basic damages to compensate for the claim that you initially filed and covering any of your out-of-pocket expenses regarding the case. This may include things like attorney fees and missed work.

What are some examples of bad faith insurance?

One of the most common cases of bad faith insurance is an insurance company refusing to pay out on a covered claim. The insurance company will falsely mislead the policyholder as to the wording and specific coverage that is mentioned in the policy. While the policy does cover the incident the policyholder is claiming, the insurance company will falsely tell them that it’s not. Another example of bad faith from an insurance company is their failure to promptly reply to a policyholder’s claim.

Throughout your lifetime, it’s likely that you’ll purchase many different types of insurance. While insurance is a great way to protect your financial well-being, not all insurance providers act in good faith. When you come across an insurance provider that is acting in bad faith, it’s a good idea to talk to a lawyer and learn about your options.