Homeowner’s Insurance (Bad Faith)
You did your part to protect your home and purchased homeowner’s insurance. You have paid your premiums on time, and then, through no fault of your own, your home suffers damage. Your instinct will be to turn to your insurance company for help.
Your insurance company’s primary goal may be to give you the smallest settlement possible for your claim. While most abide by the law, some providers will act in bad faith in an attempt to keep their employer profitable. It’s advised you consult with an insurance attorney if you believe your homeowner’s claim has been handled in bad faith.
Texas Insurance Attorney
Was your homeowner’s claim unjustly denied? Do you believe your insurance company violated your rights? LeMaster & Ahmed PLLC is a strong advocate for Texas policyholders. With more than three decades of combined experience handling insurance coverage litigation, Ms. Ahmed and Ms. LeMaster are well aware of the tactics used by insurance companies. They will use this experience to your advantage and ensure your insurance company is held accountable.
LeMaster & Ahmed PLLC has offices in The Woodlands and Plano, but regularly assist clients in surrounding areas such as Houston, Dallas and Galveston. Call (832) 356-7983 to schedule a consultation. We will evaluate your situation and advise you on the best course of action.
- What is Bad Faith?
- What are My Rights as a Policyholder?
- Bad Faith Homeowner’s Claim
- Additional Resources
What is Bad Faith?
Texas insurers owe a duty of good faith and fair dealing to the insured. This duty is often referred to as the “implied covenant of good faith and fair dealings.” By law, all insurance companies are required to act in good faith when handling claims with homeowners. If an insurance company violates or breaches this duty, a homeowner can sue them in civil court.
The Texas legislatures enacted various laws to ensure homeowners are protected from bad faith practices. Bad faith laws are codified in section 541.060 of the Texas Insurance Code. According to this statute, the following acts are considered bad faith:
- Misrepresenting policy provisions relating to the claim
- Failing to attempt in good faith to provide a prompt, fair and equitable settlement
- Refusing to pay a claim without conducting a reasonable investigation
- Failing to promptly provide a reasonable explanation for a denied claim
- Failing to accept or reject a claim within a reasonable time
- Refusing or unreasonably delaying a settlement on the grounds other coverage may be available or that a third-party may be responsible for the damage
- Undertaking to enforce a partial or full release of a claim when only a partial payment has been made, unless the payment is a compromise settlement
- Requiring a claimant as a condition of a settlement to provide their federal tax returns, unless:
- Ordered by the court;
- The claim involves lost income; or
- The claim involves fire loss
What are My Rights as a Policyholder?
Your insurance company is required to notify you of your rights as a policyholder. Failing to do so is considered bad faith and may be grounds for litigation. A copy of the Consumer’s Bill of Rights is included with your insurance policy. There are nearly 50 provisions in this document, but some of the most important rights include:
- The right to fair and honest treatment when making a claim
- The right to protection from discrimination
- The right to sue an insurance company that violated your rights
- The right to refuse to provide information to an insurance company that does not relate to your claim
- The right to reject any settlement amount
- The right to an explanation, in writing, for why a claim or part of a claim was denied
These rights do not address your responsibilities as a policyholder. However, failing to meet your obligations may affect your rights.
Bad Faith Homeowner’s Claim
Owners of a home policy have the right to sue an insurance company that acts in bad faith. Though it is vital you consult with an insurance attorney before taking any legal action. Frivolous lawsuits are not taken lightly by the court. You will be required to pay court costs and attorney fees if the court finds your claim to be baseless.
If you do have a case, however, your insurance company will be burdened with disproving their violation. If they fail to do so, the court may award you the following:
- Up to three times the amount of the homeowner’s claim
- Attorney fees and court costs
- Any other damages the court deems necessary
Unfair Settlement Practices | Texas Insurance Code – Visit the Texas Constitution and Statutes website to read the chapter governing bad faith. You can read the precise legal text of the bad faith acts mentioned on this page and learn about hearing procedures and misrepresenting policy information. You can also find out if the court can order mediation to settle a dispute and the statute of limitation for bringing civil action.
Consumer Bill of Rights | Texas Department of Insurance – Follow the link to view a complete list of your rights as a policyholder. You can learn about your rights when purchasing homeowner’s insurance and find out if an insurance company can deny you coverage because of past claims.
Insurance Lawyer in Texas
You may be tempted to accept how your insurance company is treating you, but they should be held accountable for their actions. Ms. Ahmed and Ms. LeMaster are tenacious insurance lawyers with vast experience handling bad faith claims. As your counsel, we vow to work tirelessly on your behalf to ensure you receive the settlement you need.
Call (832) 356-7983 to schedule a time to speak with LeMaster & Ahmed PLLC. We represent clients in Montgomery County, Collin County, Harris County, Dallas County and Galveston County.