Advice from a Houston Insurance Attorney
The Kishinevsky Law Firm represents clients in the greater Houston area whose claims have been wrongfully denied or otherwise mishandled by their insurance company. There are many different types of insurance and insurer/policyholder issues. General information regarding some of the more common issues that come up in insurer/policyholder disputes is provided below. Please keep in mind that depending on your specific situation, some or all of this information may not be applicable. If you would like to discuss your specific situation with an attorney, contact us today for a free consultation.
An insurance policy is a contract between the insurance company and the policyholder, and both parties are required to honor its terms. If an insurance company violates the terms of its insurance policy, it is liable for a breach of contract. Because of the unequal bargaining relationship between a policyholder and an insurance company, Texas law interprets any ambiguities in the policy in favor of the insured. Nat’l. Union Fire Ins. Co. of Pittsburgh, PA v. Hudson Energy Co., Inc., 811 S.W.2d 552 (Tex. 1991).
When someone makes a claim with their insurance company, Texas law requires the insurance company to follow specific guidelines in its processing and handling of the claim. The insurance company has a duty of good faith and fair dealing to its policyholder, which means it must evaluate the claim fairly and not deny or delay payment when liability is reasonably clear. Tex. Mut. Ins. v. Ruttiger, 381 SW 3d 430, 446 (Tex. 2012).
Section 541 of the Texas Insurance Code prohibits the insurance companies it regulates from engaging in other illegal activities when handling a claim. These include:
- Misrepresenting a material fact or policy provision relating to the coverage. Tex. Ins. Code §541.060(a)(1)
- Not attempting in good faith to bring about a prompt, fair, and equitable settlement. Tex. Ins. Code §541.060(a)(2)(A)
- Attempting to pressure a claimant to settle one portion of coverage by refusing to bring about a prompt, fair, and equitable settlement under a second portion of coverage. Tex. Ins. Code §541.060(a)(2)(A)
- Not promptly giving the policyholder a reasonable explanation of a claim denial or a settlement offer based on the policy as it relates to the facts or the law. Tex. Ins. Code §541.060(a)(3)
Texas Insurance Code §542 sets specific deadlines for when an insurer regulated by this chapter has to take certain actions after first receiving notice of a claim. The deadlines set out in this chapter include the following:
- After receiving notice of the claim, the insurer has 15 days (30 days for surplus line insurers) to acknowledge receipt of the claim, begin an investigation of the claim, request any information from the policyholder that the insurer reasonably believes will be needed in the investigation. Tex. Ins. Code §542.055
- The insurer must notify the claimant in writing within 15 business days after receiving all items requested in the investigation whether the claim is accepted or rejected (30 days in case of a “reasonable basis” belief by the insurer that the loss occurred from arson) and if the claim is being rejected include the reason for the rejection in the notice. Tex. Ins. Code §542.056
- If an insurer notifies a claimant that it will pay all or part of a claim, it must do so within five business days. Tex. Ins. Code §542.057
If an insurer violates these obligations, the policyholder may be able to recover actual damages, interest, attorney fees, and double or treble damages if it is determined at trial that the violations were knowingly committed by the insurer. If your claim was wrongfully denied, the insurance company is not offering a fair settlement, or you have any other questions or concerns relating to your insurance claim, contact us today to schedule a free consultation to discuss your situation and how we may be able to help you resolve it.