What is a bad faith insurance claim?
Your insurance company has a duty to handle your claim promptly, reasonably, and in "good faith." A "bad faith" lawsuit is really a lawsuit for the breach of the common law duty of good faith and fair dealing in the performance of a contract under Texas law. If an insurance company fails or refuses to honor its contract and pay a valid claim, you may have the right to bring a civil action for damages against that insurance company. The primary Texas statute that regulates the conduct of insurance companies in Texas is Chapter 541 of the Texas Insurance Code.
As a Tyler injury attorney I am often asked just exactly what is “bad faith”? It is probably more instructive to give an example of bad faith than an abstract definition. Take for example the case of a Tyler man who was traveling on a State Highway when a drunk driver crossed the center line and struck his vehicle causing him serious injuries which ultimately caused him to incur in excess of $100,000.00 in medical expenses. The drunk driver had only $25,000.00 in liability insurance which his insurance company paid.
The Tyler man had automobile insurance which included underinsured motorist coverage. The underinsured motorist policy had a single limit of liability of $25,000.00. The underinsured motorist carrier retained a surgeon to review all of the Tyler man’s medical treatment and expenses. The surgeon issued a written report concluding that all of the injured victim’s injuries were caused by the accident and that all of his treatment was reasonable and necessary to treat his accident related injuries. The underinsured motorist carrier then chose to ignore their own medical expert’s report and refused to pay underinsured motorists benefits. This is an excellent example of bad faith conduct by an insurance company.