Filing an insurance claim is meant to provide financial relief during times of need. When your insurer unreasonably denies, delays, or underpays a legitimate claim, they may be acting in bad faith.

In Texas, you have the right to seek compensation for your original insurance claim and the damages caused by the insurer’s wrongful actions. 

So you think your insurance company acted in bad faith. What can you expect in terms of bad faith insurance claim settlement amounts? Bad faith insurance settlements are unique to the strength of your case and your damages. Here, we will explain the value of a bad faith insurance claim in Texas and the factors that affect its calculation.

What Is a Bad Faith Insurance Claim?

Insurance companies may act in bad faith by unreasonably denying, delaying, or underpaying a legitimate claim. In Texas, there are two types of bad faith claims: common law bad faith claims and statutory bad faith claims. 

Common law bad faith claims rely on an implied covenant of good faith, requiring that insurance companies treat their customers honestly and fairly. Statutory violations occur when an insurance company violates a statute. Violations may occur when an insurer unreasonably delays responding to and paying claims or misrepresents your policy, claim, or coverage.

How Much Is a Bad Faith Claim Worth? 

Bad faith insurance settlement amounts are particular to each case. The value of your claim depends on the following factors.

Damages

The first step in calculating the value of bad faith insurance claim settlement amounts is to determine the original claim amount. This includes the amount you initially filed for, such as the cost to repair or replace your property.

The next step is determining any additional losses you experienced because the insurance company didn’t pay. The original claim amount and your additional losses are the actual damages that you can recover in a bad faith claim.

Emotional Distress

In any insurance claim, the insurer’s bad faith in denying, delaying, or underpaying a claim can cause significant emotional distress.

When you rely on your insurer’s protection during a time of need and that safety net is broken, it can cause anxiety, mental anguish, suffering, worry, and so forth. In addition to economic damages, you can qualify for non-economic damages such as pain and suffering for a bad faith claim.

Interest

You may be able to receive interest on your compensation of bad faith insurance damages. The amount of interest you can receive will depend on your claim type.

The Texas Insurance Code was amended in 2017, decreasing the interest on damages you can receive for specific claims. After this amendment, you can receive 13.5% interest annually on bad faith damages for weather losses.

For other bad faith claims, interest is calculated at 18% per year, plus 5% interest while the lawsuit is pending. 

Failure to Indemnify

If your insurer refused, in bad faith, to settle a claim against you by a third party, you may be able to seek compensation for expenses you incur as a result.

This might occur where a court enters a judgment against you for more than the limits of your insurance policy after your insurer refuses to reach a reasonable settlement with the third party. In that case, the insurer may be responsible to pay the additional amount of the judgment and associated costs.

Punitive Damages

In Texas, you may also be eligible for punitive damages up to three times the amount of your actual damages in a bad faith claim. To receive “treble damages,” you must show that the insurance company knowingly or intentionally acted in bad faith. Treble damages are not awarded often and are frequently overturned on appeal. But they are available for the right bad faith claim.

Attorney Fees and Court Costs

You may claim attorney fees and court costs in Texas bad faith claims. One way that you can receive attorney fees for a Texas bad faith insurance claim is to show that the insurer breached its contract with you.

The second way you can receive attorney fees is to show that an insurer violated specific laws in the Texas Insurance Code. You may also receive court costs associated with filing your bad faith claim in court.

Let a Skilled Insurance Lawyer Help

Determining the value of your bad faith lawsuit settlement is more complex than simply adding up your damages. The value of your bad faith insurance claim is based on many complex factors and the strength of your individual case.

The experienced insurance lawyers at Armstrong, Lee & Baker, LLP can help you determine what your claim is likely to be worth. We have recovered millions of dollars on behalf of our clients, and we are ready to fight for your rights. Contact us today to schedule a free consultation.