Dealing with insurance companies after a car accident can be frustrating and difficult. No matter what the circumstances, all insurance companies are obligated to act in good faith toward their policyholders. Following a circumstance that has adversely affected the insured individual’s way of life, a claim is most commonly filed as soon as possible in order to collect compensation and avoid unforeseen financial burdens.
Unfortunately, bad faith insurance tactics lead to bigger problems for policyholders. Though acting in bad faith, or employing unfair tactics when a claim is valid, violates the Texas Insurance Code, some insurance companies may choose to disregard liabilities for their own benefit. If you believe that an insurance company may be negotiating your car accident claim in bad faith, you may be entitled to take legal action against the insurance company.
This article provides some basic information about bad faith insurance tactics in car accident claims. It is not a substitute for speaking to an attorney. Only a qualified car accident lawyer can give you legal advice.
Resources For Bad Faith Insurance in a Car Accident Claim
- What is Insurance Bad Faith?
- Examples of Bad Faith Insurance Tactics
- Proving Bad Faith in a Bad Faith Insurance Claim
- Damages in a Bad Faith Insurance Lawsuit
- Get a consultation with a bad faith attorney
What is Insurance Bad Faith?
All insurance companies are required to investigate, negotiate, and settle claims in good faith. This is due to a longstanding duty which automatically exists in every insurance contract known as the “implied covenant of good faith and fair dealing.” It requires the party or parties to a contract to treat each other honestly, fairly, and in good faith, so as to not prevent the other party or parties from receiving the benefits of the contract.
When insurance companies violate this duty, they can be held liable in court for their bad faith acts. All jurisdictions, including Texas, recognize the right of those harmed by bad faith insurance tactics to bring a claim against the insurance company for its bad faith tactics. These types of claims, which arise under tort law, are often referred to as bad faith insurance claims or bad faith insurance lawsuits.
Examples of Bad Faith Insurance Tactics
There is consensus in the legal community that insurance company’s adjusters need to use reliable systems when evaluating claims. Even though bad faith should never be a guiding principle for insurance companies, few truly understand how they do business, which makes it difficult to get a full understanding of what goes on behind the scenes. The insurance industry does, however, employ some well-known tactics.
In this regard, insurance companies engage in a variety of different practices that are bad faith in nature. Below are examples of bad faith insurance tactics, but this list is by no means exhaustive.
1. Denying A Claim Without Giving A Reason
When an insurance company denies a claim following a car accident, they should give a reason. If you made a valid claim to an insurance company after a car accident and it was denied for no reason or for an invalid reason, you may have a claim against the insurance company for bad faith.
2. Failing To Conduct An Adequate Investigation Into A Claim
The duty of good faith and fair dealing requires insurance companies to conduct prompt and thorough investigations into car accident claims. If an insurance company has delayed its investigation into your claim or conducted a poor investigation, you may have a bad faith insurance claim.
3. Delaying Payment Of A Valid Claim
Insurance companies must pay on claims within a reasonable time frame. If an insurance company has approved your car accident claim but has unreasonably delayed payment of the claim, you may have a claim against the insurance company for bad faith.
4. Offering Significantly Less Money Than A Claim Is Worth
During the claim negotiation process, insurance companies often propose “low-ball” settlements. But when an insurance company refuses to budge from a low-ball settlement offer, it may be acting in bad faith. If an insurance company offered you significantly less money for your claim than it is worth, you may have a claim for bad faith.
5. Refusing To Pay A Valid Claim
If an insurance company is refusing to settle or pay a valid claim after a car accident, it is likely acting in bad faith. If you filed a claim with an insurance company after a car accident that was clearly covered by your policy or that of the other driver and it was denied, the insurance company may be liable for its bad faith denial.
6. Making Threatening Statements
Insurance companies should never threaten policyholders or third parties who make claims after a car accident. Insurance companies should treat policyholders and others in a respectful and professional manner. If an insurance company has made threats of any kind against you, contact an experienced car accident lawyer right away.
7. Misrepresenting The Law Or Policy Language
If an insurance company has intentionally misrepresented the law or language in the insurance policy applicable to your car accident claim, you may have a legal claim against the insurance company for bad faith. As part of the duty of good faith and fair dealing, insurance companies must be honest and truthful in their statements about the law and the insurance policies involved in a claim.
8. Refusing Requests For Documentation
Insurance companies should always comply with reasonable requests for documentation from policyholders and third parties. If you have asked an insurance company to provide documentation in support of its decisions and the insurance company refused to supply it, you may have a claim for bad faith.
Proving Bad Faith in a Bad Faith Insurance Claim
In order to establish that an insurance company acted in bad faith, you must show that the facts and circumstances surrounding the insurance company’s actions indicate that the company acted in bad faith. Because the bad faith inquiry is focused on specific facts and circumstances that vary in each case, it can be very difficult to establish that an insurance company acted in bad faith. This is one of the many reasons why you should work with an experienced and trusted accident lawyer after a car accident.
It is important to understand that your claim against an insurance company that you believe acted in bad faith is separate from your claim against the other driver who was responsible for your accident. An expert insurance lawyer can help you better understand how a bad faith insurance lawsuit differs from a car accident lawsuit filed against the at-fault driver.
Damages in a Bad Faith Insurance Lawsuit
In bad faith insurance claims, settlements are determined by the facts of your case, your insurance provider’s reputation, and any previous violations the provider may have committed. Depending on how your claim was handled, you can potentially obtain much higher compensation than if it had been honored from the beginning.
The law on which types of compensation (also known as damages) are available in a bad faith lawsuit varies by jurisdiction.
A bad faith act by your insurer can be hard to recognize. Deliberately using ambiguous terminology makes it harder to judge whether their behavior is appropriate or not.
When you trust that your insurance company will protect you, you may become suspicious or even doubtful when an insurance company acts in bad faith. The best car accident lawyer will notice when an insurance company is taking advantage of you.
For those who suspect that their claim is not being handled fairly and honestly, it is important to document any correspondence with the insurance company. Get in touch with an experienced Houston car accident lawyer to look into your claim, investigate whether any laws have been broken, and hold the insurance company accountable if you have been wronged.
Contact an Experienced Texas Bad Faith Insurance Lawyer
If you were involved in a car accident and believe that an insurance company is acting in bad faith with respect to your claims, a car accident lawyer may be able to help.
Sutliff & Stout Law Firm have Board-Certified Houston car accident lawyers who have experience handling bad faith insurance claims. To schedule a free and confidential consultation about your case, text or call (713) 987-7111 anytime or complete an online contact form.