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Understanding bad faith insurance practices

Insurance is a benefit that most in San Antonio likely recognize the need for yet hope they never have to take advantage of. That feeling likely arises from the assumption many may have that insurers are difficult to work with. It may be understood that insurance companies do not stay in business by paying out on every single claim they receive, yet most policyholders expect that as long as they remain current on their premium payments, benefits will be extended when they need them. When they are not, policyholders rightfully want to know why

Claims are not simply paid at an insurer's discretion. Guidelines are in place to keep them from negotiating in bad faith. Those guidelines (specific to claim settlements) can be found in Section 541.060 of the Texas Insurance code. This law states that it is unlawful for insurers to: 

  • Misrepresent facts or policy provisions related to coverage to a claimant
  • Fail to act in good faith to fairly, equitably and promptly settle a claim
  • Fail to affirm or deny coverage within a reasonable amount of time
  • Unreasonably delay dealing with a claim applicable to first party coverage by claiming that third parties are instead responsible 
  • Refuse to pay a claim without first investigating it
  • Fail to provide a reason for denying coverage

The law goes on to say that an insurer cannot push to release a claim on which only a partial payment has been made, nor can it demand receipt of a claimant's tax records as a condition of payment.

Conversely, Texas state law also affords protection to insurers from unreasonable settlement demands. According to the American Bar Association, the Texas Supreme Court has ruled that insurers are only required to pay settlements that are within policy limits. 

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The Law Office of Jessica Taylor, PLLC

The Law Office of Jessica Taylor, PLLC
14100 San Pedro Avenue
Suite 602
San Antonio, TX 78232

Phone: 210-265-6759
Phone: (210) 402-4022
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