Dealing with insurance companies after an auto accident is often frustrating and challenging. If you believe your insurance company is acting unfairly or dishonestly, it may be acting in bad faith.
Auto insurance bad faith occurs when an insurance company fails to fulfill its contractual obligations in an unfair or unreasonable manner. Here, we will explore some examples of bad faith auto insurance claims and how to protect yourself.
What Is Insurance Bad Faith?
An insurance company acts in bad faith when it knowingly acts unreasonably in processing, responding to, or paying your 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
When you have an insurance policy, you have a contract with the insurance company. In Texas, all insurance contracts have an “implied covenant of good faith.” This means the insurance company is required to treat you honestly and fairly. When an insurance company violates this duty, you may be able to sue the company for bad faith.
Statutory Bad Faith Claims
Statutory violations occur when an insurance company violates a statute. Chapters 541 and 542 of the Texas Insurance Code bar an insurance company from carrying out “unfair or deceptive acts or practices in the business of insurance.” Statutory violations may occur when an insurer unreasonably delays responding to and paying claims or misrepresents your policy, claim, or coverage.
What Are Examples of Bad Faith Auto Insurance Claims?
When you get into an auto accident and your insurance company is acting unfairly and unreasonably, those actions may amount to auto insurance bad faith. Below, we will cover some sample bad faith insurance complaints.
Unreasonable Claim Denials
One of the most blatant forms of bad faith is when an insurance company unreasonably denies a valid claim. For instance, if a policyholder submits a claim for damages resulting from a covered auto accident and the insurer denies the claim without a valid reason or investigation, it’s an example of bad faith.
Lowball Settlement Offers
Another common tactic employed by insurers is making lowball settlement offers. They may acknowledge the claim but offer a settlement amount significantly lower than what’s necessary to cover the losses. If an insurer is offering substantially less money than a claim is worth, they may be acting in bad faith.
Excessive Delays of Payment
Insurance companies are required to process claims promptly. If an insurance company has approved your car accident claim but has delayed payment of the claim without a valid reason, this can be considered bad faith.
Misrepresenting Policy Terms
If an insurance company intentionally misrepresents the terms of your insurance policy to avoid paying your car accident claim, you may have a bad faith claim. This can include inaccurately explaining policy exclusions or coverage limitations.
Failure to Conduct an Adequate Investigation
If the insurer fails to conduct a proper and thorough investigation of a claim, it may be acting in bad faith. For instance, if an auto accident’s circumstances are unclear, the insurance company should investigate rather than automatically denying the claim.
Contact an Attorney
If you believe your auto insurance company has acted in bad faith, you may be able to file a lawsuit against your insurance company and receive damages. Bad faith insurance claims are often complex, and if you want compensation for a bad faith auto claim, you should consult an experienced Texas insurance lawyer.
Here at Armstrong, Lee & Baker, we have obtained millions of dollars on behalf of our clients. Our attorneys are experienced in auto and insurance law and are committed to fighting for justice on your behalf. Contact us today to schedule a free consultation.
Scott Armstrong obtains remarkable results for his clients. He has successfully tried numerous cases to favorable verdicts and reached significant settlements on his clients’ behalf. In the process, he has recovered millions for his clients.