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Bad Faith

Your insurance company is required to act in good faith when you file a claim. Most insurers act in good faith and abide by the law, but there some who bend the rules in an attempt to maintain profit. Any adjuster who unjustly denies a claim or reduces a payout based on race or religion is acting in bad faith.

As a policyholder, you have the right to sue an insurance company if you believe they are engaging in unfair settlement practices. Contact an insurance lawyer if this is the case. You may be eligible for up to three times the cost of necessary repairs and attorney fees.

Insurance Attorney in Texas

Your insurance company needs to be held responsible for breaking the law. The attorneys at LeMaster & Ahmed PLLC have vast experience handling bad faith claims. Ms. Ahmed and Ms. LeMaster will work tirelessly on your behalf to ensure your insurance company is held accountable for their actions and that you receive the settlement you are entitled to.

LeMaster & Ahmed PLLC represents clients throughout Texas in Galveston County, Harris County, Montgomery County, Dallas County and Collin County. Call (832) 356-7983 to discuss your legal options.

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Texas’ Bad Faith Laws

As policyholders, we trust our insurance company is working in our best interest. Unfortunately, insurance is a for-profit business. Texas lawmakers are aware of the power insurance companies have. They have adjusters with more insurance knowledge than the average consumer and immense decision-making power.

Legislatures implemented various laws to protect consumers from bad faith practices, also known as unfair settlement practices. According to section 541.060 of the Texas Insurance Code, the following acts are considered bad faith:

  • Misrepresenting to a claimant fact or policy provisions relating to the coverage at issue
  • Failing to attempt in good faith to pay a prompt, fair and equitable settlement
  • Failing to promptly provide a reasonable explanation for a denied claim
  • Failing within a reasonable time to confirm or deny a claim or provide a list of rights to a policyholder
  • Failing, refusing or unreasonably delaying a settlement on the basis that other coverage may be available or that third-parties are responsible for the damage
  • Undertaking to enforce a full and partial release of a claim from a policyholder when only a partial payment has been made, unless the payment is a compromise settlement of a doubtful or disputed claim
  • Refusing to pay a claim without conducting a reasonable investigation
  • Requiring a claimant as a condition of settling a claim to provide their federal tax returns, unless:
    • Ordered by the court;
    • The claim involves fire loss; or
    • The claim involves lost income or profits

Your Rights as a Policyholder

You have rights as a policyholder. Arming yourself with basic knowledge of your rights may help speed up the claims process and improve your chances of a greater settlement. These rights were developed by the Texas Department of Insurance and are required to be included with your policy. It’s considered bad faith if your insurer fails to provide a copy of these rights.

The Consumer Bill of Rights has nearly 50 provisions. For the sake of time, LeMaster & Ahmed PLLC pulled some of the most essential rights. A complete list can be found at the link posted in the resource section below. Keep in mind; these rights do not address your responsibilities as a policyholder, though failing to meet your obligations may affect your rights.

Listed below are some of your rights as a policyholder:

  • The right to fair and honest treatment when making a claim
  • The right to reject any settlement amount, including unfair violations offered by the insurance company
  • The right to an explanation in writing for why a claim or part of a claim was denied
  • The right to refuse to provide an insurance company with information that does not relate to a claim
  • The right to protection from discrimination
  • The right to sue an insurance company that violated your rights

Recoverable Damages

One of your rights as a policyholder is the right to sue an insurance company who acts in bad faith or violates your rights. If you sue to recover under your insurance policy, the insurance company is tasked with the burden of disproving their violation. If you prevail, you can recover the following damages:

  • Up to three times the amount of actual damages
  • Reasonable and necessary attorney fees
  • Any other relief the court deems proper

Your best course of action is to speak with an insurance company if you believe you have grounds for a lawsuit. Do not chance representing yourself in civil court. Insurance companies hire esteemed lawyers who will see straight through your allegations. Thankfully, the attorneys at LeMaster & Ahmed PLLC have vast experience working with insurance companies and are fully aware of their tactics. We will use this to your advantage and ensure you receive every penny you are entitled to.


Additional Resources

Consumer Bill of Rights | Texas Department of Insurance – Follow the link provided to view a complete list of rights for policyholders in Texas. You can find your information on your rights when purchasing insurance, your rights to cancel a policy and your rights when filing a claim. The information is provided by the Texas Department of Insurance, which is the entity responsible for regulating insurance in the state.

Unfair Settlement Practices | Texas Insurance Code – Visit the Texas Constitution and Statutes website to read the chapter of the insurance code governing bad faith insurance practices. By accessing the site, you can find information about additional bad faith practices such as misrepresenting insurance policies and certain practices that are not considered discriminatory.


Texas Insurance Lawyer for Bad Faith in The Woodlands

An insurance company acting in bad faith should not be taken lightly. You may be tempted to sweep the violation under the rug and accept what an adjuster is willing to give you, but it’s advised you take legal action. As a policyholder, you have the right to sue your insurance company for the full amount you need.

LeMaster & Ahmed PLLC has more than 20 years of experience representing claimants like you. As your counsel, we vow to aggressively advocate on your behalf and ensure your insurance provider is held accountable. Call (832) 356-7983 to schedule a consultation. We represent clients in areas such as Houston, Galveston, The Woodlands, Dallas and Plano.


This article was last updated on August 12, 2019.