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Bad Faith Insurance Practices

Insurance Companies Have a Legal Obligation to Treat You Fairly

Texas Bad Faith Insurance Attorneys

Helping People Throughout Houston & Beyond with Their Insurance Claims

If you think your insurance company is on your side, it can be a rude awakening to find out the opposite is true. Though not all insurers are malicious, make no mistake that they are all driven by profit, not customer satisfaction. One of the serious issues that can arise due to this drive is bad faith.

Insurance companies have a right to investigate insurance claims made by homeowners and businesses. However, when their treatment of a claim becomes unfair and unreasonable, their conduct may cross a legal line and become a "bad faith" or "unfair" insurance practice that is prohibited by state laws.

Arnold & Itkin is experienced in holding insurance companies accountable for their unethical or illegal conduct and in obtaining successful verdicts and settlements on behalf of those throughout Texas, Louisiana, Mississippi, Alabama, Georgia, and Florida who have been harmed by their insurer's unfair practices.

Allow us to put our skill, expertise, and resources to work for you. Call (888) 493-1629 today for a free review of your case.

Unfair Insurance Practices

A person may bring suit against an insurer who has caused him or her actual damages by engaging in unfair or deceptive acts or practice. For example, the Gulf Coast has been hit hard by hurricanes and tropical storms in recent years. Due to the volume of claims being filed by homeowners and businesses, insurance companies have seen their profit margins take a hit as well. Facing the pressure to reduce their losses, some insurers, and their agents, brokers, and adjusters have turned to prohibited practices to save their money.

Such unfair practices include, but are not limited to, the following:

  • Misrepresenting a material fact or policy provision relating to coverage
  • Failing to fully disclose the policy limitations and exclusions prior to purchase.
  • Failing to make prompt, fair, and equitable settlement of a claim after the insurer's liability is established
  • Failing to promptly, fairly settle one portion of a claim to influence the settlement of an additional claim
  • Failing to promptly provide a reasonable explanation of the basis for a claim denial or compromise
  • Failing to affirm or deny coverage of a claim within a reasonable time
  • Attempting to enforce a full and final release of a claim when only a partial payment has been made
  • Refusing to pay a claim without conducting a reasonable investigation
  • Delaying a claim solely because there is other insurance available
  • Requiring a claimant, as a condition of settlement, provide federal income tax returns for examination or investigation unless claimant is court-ordered, claim involve fire loss, or claim involves lost profits

How Bad Faith Insurance Laws Curb These Practices

There are laws in place to help prevent bad faith insurance practices. When insurers do commit bad faith against a policyholder, these laws allow them to take legal action in response to such abuses and mistreatment. These laws were put in place to protect individuals from unethical practices. You can file a complaint with your state insurance board if your insurer continues to refuse to provide a fair settlement. Once you have done this, an investigation will begin to determine if bad faith practices were really involved. However, taking further legal action is often necessary to obtain the fair claim amount you deserve, as the board cannot force them to pay a claim in full, only levy fines against them. This means you may need to pursue a case on top of the complaint you filed against them.

When Is It Not Bad Faith?

Bad faith practices can cause serious harm to a policyholder. It is important you understand these practices so you don’t suffer abuse from your insurer. However, not all frustrating actions by insurance companies are considered bad faith practices. For example, a disagreement or difference of opinion between an adjuster and policyholder on the total loss amount doesn’t necessarily equate to bad faith. On the other hand, if the adjuster failed to provide any proof or support of their deduction to your claim amount, then bad faith practices may have played a part. Keep in mind, a simple mistake or error on the part of your insurer doesn’t mean they acted in bad faith.

Bad Faith Insurance Claims

Insurance companies that unreasonably deny claim coverage are acting in bad faith. Not every denied insurance claim is bad faith, but if you have been denied coverage or have been offered a reduced settlement without a proper explanation, you may be entitled to bring a claim.

Examples of bad faith insurance practices include the following:

  • Unwarranted denial of coverage
  • Failure to communicate pertinent information
  • Refusal to pay the claim without an investigation
  • Failure to deny or pay the claim promptly
  • Failure to attempt to come to a fair and reasonable settlement when liability is apparent
  • Offering a settlement substantially smaller than the true value of the claim
  • Failure to provide a reasonable explanation for denials
  • Failure to enter into settlement negotiations
  • Failure to respond to a time-limit demand
  • Failure to disclose policy limits and/or exclusions

Insurance Bad Faith FAQ

What Is Insurance Bad Faith?

Insurance bad faith claims are claims against an insurer that wrongfully attempts to betray its obligations to a claimant. Insurers are obligated to pay any valid claim. If they fail to investigate a claim or deny a claim without valid reason, they may be found to be operating in bad faith and thus financially obligated to compensate you.

How Do I Prove My Insurer Acted in Bad Faith?

To prove a bad faith insurance claim, you’ll need to prove your insurer behaved in a way that was unreasonable or without valid cause. In most cases, that will involve holding your insurer accountable for failing to make a full and fair investigation of your claim within a certain time window. Either delaying or denying a valid claim is illegal.

Does My Insurer Owe Me an Explanation for Why the Claim Was Denied?

Yes. As a claimant, one of your most fundamental rights is the right to a reasonable explanation for why your claim was denied. You are entitled to full payment under your policy or a reasonable settlement for your damages. If your insurer refuses to offer to pay a valid claim, they need to provide detailed explanation for why your claim was denied. Even if they provide an explanation, it’s still possible that they committed insurance bad faith.

Call (888) 493-1629 to Schedule a Free Consultation with Our Firm

If you are a business or homeowner who has suffered hardship as the result of an insurance company's unfair or deceptive practices, contact our Houston insurance lawyers to learn about your options. We know the deceptive tactics that insurance companies can utilize, and we are dedicated to doing everything we can to helping our clients obtain the just outcome they deserve. You can be confident knowing that should you choose to work with us that we will do everything possible to provide our clients with the high-quality level of service they deserve.

Contact Arnold & Itkin today to find out what our insurance attorneys can do to expose bad faith and help you recover the full value of your claim, plus damages.

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  • $117 Million Largest Single-Event Personal Injury Verdict in Louisiana History Arnold & Itkin represented a pregnant woman who experienced stomach pain and called Acadian Ambulance. The driver of the ambulance drove the ambulance into the back of a sugar cane truck causing the plaintiff's spine to be severed at T4 and for her ...
  • $116 Million Confidential Settlement Arnold & Itkin LLP negotiated a massive nine figure settlement on behalf of their clients after several years of hard fought litigation.
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