Texas state law holds insurance companies to a good-faith standard with respect to their policyholders. In practice, that means that insurance companies are supposed to act fairly when it comes to paying benefits and refrain from certain practices deemed unfair under Texas law. When a disability insurance provider or other insurer acts in bad faith, the affected policyholder has options to seek relief.
Insurance policies, as well as the laws governing application of those policies can be extremely complex. So, many disability insurance claimants find it helpful to work with an experienced Texas bad faith insurance lawyer. An experienced attorney can explain their options and help them work toward the appropriate relief.
Insurance companies are not required to pay every claim filed with them. They have the right to evaluate a claim to ensure that the person seeking benefits qualifies under the terms of the policy.
However, when a company denies a claim in an instance where the beneficiary clearly qualifies, that denial may be an instance of bad faith. Tex. Ins. Code §541.060(a)(2)(A) specifies that an insurer violates the law when it fails “to attempt in good faith to effectuate a prompt, fair, and equitable settlement of a claim with respect to which the insurer’s liability has become reasonably clear.”
The Insurance Code goes on to describe numerous other actions that also constitute unfair practices and may also be considered bad faith. For instance, Tex. Ins. Code §541.060(a)(7) states that an insurer commits an unfair settlement practice by “refusing to pay a claim without conducting a reasonable investigation with respect to the claim.”
For-profit insurance companies typically seek to protect their bottom line, regardless of how much they may talk about customer service. Sometimes, in trying to keep their costs low, they cross the line with conduct that is not only unfair but also illegal.
Some examples of illegal bad-faith conduct include:
Determining whether conduct constitutes bad faith under Texas law can be tricky, but an experienced bad faith insurance attorney could analyze the circumstances of a case to establish the existence of bad faith and ascertain the appropriate remedies to seek.
While insurers may be guilty of bad faith in all aspects of insurance, claims for bad faith seem to be more common with certain types of policies, including long term disability insurance. In many instances, it is necessary to file a lawsuit to obtain the benefits that should have been paid all along. Fortunately, a successful bad-faith claim may provide compensation above and beyond the terms of the policy.
Although the filing of a lawsuit will often prompt an insurance company to settle out of court, there can be advantages to taking a case to trial. If an insurer is found to be egregious in its behavior, it may be possible to obtain punitive damages in response to their actions, in addition to damages to compensate for lost benefits and other factors.
Insurance companies are quick to accept premium payments on behalf of policy holders, but often slow to pay out when those policyholders need to take advantage of the benefits they were promised. When their settlement practices cross the line into bad-faith conduct, they should be held liable for any harm caused.
So, if you were denied benefits to which you believe you are entitled under your disability policy, it may be worthwhile to consult an experienced Texas bad-faith insurance lawyer. A dedicated attorney could review your claim and make every effort to help you receive the benefits to which you are entitled.
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