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First Party Insurance Claims for Property Damage

This page concerns first-party insurance claims for property damage.  Visit our other pages to learn about first-party insurance claims involving underinsured and insured motorists or personal injury protection and medical payments coverage.

A first-party insurance claim is between the person who holds the insurance policy and their own insurance company. In contrast, a third-party insurance claim is one where three individuals are involved. The third-party individual makes a claim to the first-party’s insurance company.

The following are examples of common first-party insurance claims:

  • Commercial and Residential Claims
    • Hailstorm
    • Windstorm
    • Hurricane
    • Fire
    • Water
    • Tornado
    • Foundation or Structural damage
  • Automobile claims
    • Flood
    • Vandalism
    • Hail

What Recourse is Available to a Policyholder?

Depending on the facts, each case could assert up to three different causes of action against an insurance company for improperly adjusting an insurance claim.  Breach-of-contract, bad faith, and violating the Texas Prompt Payment of Claims Act.  Our goal is to make our clients whole while, at the same time, force the insurance company to pay for the costs of hiring an attorney as required under Texas law.

Breach-of Contract

An insurance policy is a contract between you and your insurance company.  In exchange for your premiums, an insurance company promises to pay benefits under your policy for covered damages that exceed a policyholder’s deductible.  When an insurance company refuses to pay for covered damages entirely or underpays an covered insurance claim, breach-of-contract is a cause of action designed to make your insurance company pay the correct amount—or in other words, make you whole under your policy.

Additionally, both you and your insurance company have obligations under an insurance policy.  These obligations are different depending the insurance company and the specific policy, but an insurance company can breach an obligation under its policy as well.  For example, an insurance company usually has an obligation under the policy to pay within a certain amount of time.  A failure to do so can also result in the insurance company breaching the contract.

Bad Faith

In addition to the requirements in an insurance policy, insurance companies must also comply with Texas law.  In Texas, insurance companies cannot adjust claims using unfair or deceptive trade practices.  The focus of a lawsuit for bad faith is not only on the outcome of the insurance company’s adjustment but the actions the insurance company took to get there.  In other words, we look to the insurance company’s actions or inactions it took and whether it followed its own policies or procedures.  Some examples of unfair settlement practices are:

  • Misrepresent a provision in the insurance policy.
  • Failing to promptly and fairly settle a claim where liability is reasonably clear.
  • Failing to provide a reasonable explanation of why the insurance company denial of a claim or offer to settle a claim.
  • Failing to make a claims decision within a reasonable amount of time.
  • Refusing to pay a claim without conducting a reasonable investigation.
  • Failing to adopt and implement reasonable standards for the prompt investigation of claims.
  • Forcing a policyholder to file lawsuit to recover an amount due under a policy by offering substantially less than the amount ultimately recovered in a lawsuit.

Texas Prompt Payment of Claims Act

Insurance companies must also investigate and pay claims within a timely fashion by law.  While the law is titled “Texas Prompt Payment of Claims” it imposes obligations on insurance companies beyond payment.  For example, insurance companies must meet the following deadlines when adjusting a claim in Texas:

  • Within fifteen days from receiving notice of a claim, an insurance company must:
    • acknowledge receipt of the claim,
    • commence any investigation, and
    • request any items, statements, and forms required from the policyholder.
  • Within fifteen days after receiving from the policyholder all required items, statements, and forms, the insurer must give notice that it either:
    • rejects the claim, or
    • accepts the claim.
  • If an insurance company rejects the claim, it must explain its reasons why.
  • If an insurance company accepts the claim, it must pay within five business days. iand 

Depending on the particular violation—and whether the insurance company accepted or rejected the claim—an insurance company may owe statutory interest and attorney’s fees.