Insurance companies assume financial risks when they sell someone a policy. Whether the customer purchases a renter, homeowner, auto or commercial liability policy, the insurance company must pay valid claims and do so timely. If an insurance company refuses to pay or follow through with its responsibilities to the agreement, a Texas policyholder may bring a bad faith lawsuit.
Bad faith claims
Bad faith claims center on an insurance company keeping promises and valid benefits from customers for legally unacceptable reasons. For example, suppose an auto insurance company won’t pay a liability claim by stating the insured wasn’t negligent, even though all facts point to negligence. In that case, the insurance company may be acting in bad faith.
Insurance companies have other responsibilities, including conducting an honest investigation into insurance claims. Purposely dragging out the investigation to delay payments might result in a bad faith insurance lawsuit. Insurance companies must also timely approve or deny claims timely. Approvals require payments made on time. Ultimately, civil litigation might follow when an insurance company refuses to follow through on contractual obligations.
Bad faith lawsuits
An insurance provider may argue that it has no obligation to pay a claim. The policyholder might have concrete proof that refutes the insurance company’s claim, but the provider refuses to pay. Suing the insurance company in court and providing compelling evidence could lead to the policyholder receiving what is due.
When someone’s mistakes or fault causes another person to suffer harm, the individual may face requirements to pay significant compensation. The at-fault party may rely on a valid insurance claim to provide a settlement to victims. When the insurance company refuses to pay, the insurer might face a credible lawsuit.