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Understanding bad faith insurance

Unfortunately, every year, Texas residents fall victim to bad faith insurance. Understanding bad faith insurance can help individuals identify when they’re being defrauded. When people know that they’re being defrauded, they can report the incident to the appropriate authorities so that they can receive compensation for their claim.

What bad faith insurance means

Insurance bad faith happens when an insurance company reneges on its obligations to a policyholder. An insurance company can do this in many ways. One of the most common methods is not responding to the policyholder’s claim in a reasonable amount of time. Another is a complete refusal to cover the policyholder’s claim due to false reasoning. Many times, an insurance company will misrepresent the contract wording to confuse the policyholder about his or her coverage.

Seeking damages in a legal matter

If an insurance carrier acts in bad faith, it’s a policyholder’s right to seek legal compensation from the offending carrier. In most states, the insurance company will be liable for paying for the items on the insurance claim that should’ve been covered. In addition, it will be responsible for paying for any added expenditures, like the costs of missed work or out-of-pocket expenses the policyholder had to pay.

In some events, an insurance company may have conducted itself in a completely egregious way. The judge may award the policyholder punitive damages. This is done with the intent of forcing the insurance company to discourage any future behavior that is similar.

Unfortunately, some insurance companies may act in bad faith. As a policyholder, it’s your right to take a bad faith insurance company to court to demand the necessary compensation. If you believe that you’ve been a victim of bad faith insurance, you may want to seek the assistance of an attorney to help fight your case.