Are Your Customers Scared of Suing Their Insurance Company? Why They Should be Fearless
January 11, 2017
Insurance companies are generally viewed as big, powerful, and wealthy entities. That is not an unreasonable perception. Insurance companies receive premiums from thousands of people and pay millions of dollars in claims every day. Some of these companies are even listed in both U.S. and European stock markets. As you can imagine, they have armies of attorneys to protect them and look after their interests. This is why they are feared. Are your customers scared of suing their insurance company? They should not be, and here is why.
Despite this common perception, insurance companies should not be feared, especially by homeowners who comply with their policy obligations by paying premiums on time, and who just expect their insurance company to keep up their end of the bargain.
Insurance companies, like any other person or company, are subject to general obligations (e.g. pay taxes, pay rent, comply with contractual obligations, etc). They are also subject to obligations specific to insurance companies. These obligations can be summarized in their duty to act in good faith and fair dealing.
Insurance companies should always act honestly, fairly, and in good faith at all times by not: (1) misrepresenting pertinent facts about a policy provision or coverage; (2) failing to promptly acknowledge a claim under the insured’s policy; (3) failing to conduct a prompt investigation of any claim; (4) denying claims without justification; and/or (5) unnecessarily delaying payment of claims, among others. It is clear that the insurance company “status” does not exempt them from complying with their obligations, and they are certainly not immune from sanctions or penalties should they fail to adhere to their duties.
Most U.S. states have adopted an Insurance Code whose purpose is to regulate insurance companies’ activities and conduct towards their insureds. Texas is one of these states and has adopted the Texas Insurance Code (TIC). The TIC protects policyholders (property owners) against unfair or deceptive acts or practices in the business of insurance. Penalties for violating these provisions (including the duty of good faith and fair dealing mentioned above) include payment of actual damages (determined by the total loss of the homeowner), attorney’s fees, and in some cases additional damages. For instance, if the court finds that the insurance company knowingly acted in bad faith, the court may award the homeowner up to three times the amount of actual damages.
If you have a customer whose claim has been handled in bad faith and who is scared of suing his or her insurance company, let them know that they should be fearless. Texas laws are in place to protect the rights of property owners.
The attorneys at the Amaro Law Firm have vast experience dealing with insurance companies. In fact, some of their attorneys worked as insurance company defense lawyers before joining the firm. Now, they help property owners fight for fair and just treatment. Our consultations are free. If we cannot add value to your claim, we will not take your case. Therefore, we are only paid if we win. Contact us for a free claim evaluation.