Why Most Bad Faith Hail Cases Never Go to Trial

Bad faith is an intentional dishonest act aimed at deceiving others. In the insurance context, the meaning is much broader and technical: Bad faith is when the insurance company fails to attempt in good faith to make a prompt, fair, and equitable settlement of a claim of its insureds (e.g. property owners), even when the insurance company liability has become reasonably clear, or when there is some type of misrepresentation about the insurance policy and its coverage.

Bad faith practices are so common in the insurance industry and have been taking place for so long, that virtually every state in the U. S. has enacted their own insurance codes. The purpose of these codes is to regulate and punish unfair and deceptive practices in the insurance business.

The Texas Insurance Code (TIC), like other states’ statutes, has a list of practices that are considered unfair and/or deceptive and therefore considered bad faith acts. The most common bad faith acts by insurance companies in hail cases are: (1) Misrepresenting to a property owner a material fact or policy clause related to coverage; (2) Failing to promptly provide a homeowner a reasonable explanation for the denial of the claim; (3) Failing within a reasonable time to affirm or deny coverage of a claim to a property owner, or submit a reservation of rights to a property owner; and/or (4) Refusing to pay a claim without conducting a reasonable investigation with respect of the claim.

Considering the egregiousness of some of these conducts, the TIC provides a private cause of action for damages to policyholders (property owners) who suffer any harm as a direct result of an insurance company’s wrongful conduct. A policyholder who is able to prove any of these conducts, will most likely prevail in a lawsuit filed under the insurance code and who may in turn obtain actual damages plus court costs and reasonable, and necessary attorney’s fees. In addition, if it is shown that the insurance company acted “knowingly,” the court may even award an amount equivalent to 3 times the amount of actual damages (this is known as “treble” damages).

Considering the severity of the penalties for bad faith conduct, most insurance companies will try to settle the case before going to trial. This is especially true if the insurance company knows that the homeowner is being represented by an experienced and successful insurance attorney.

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.