Category: Bad Faith Insurance

When something bad happens and damages your home, you can be left feeling quite upset. Things can be even worse if the damage is so bad that you have to leave your home. The only source of comfort you might have is the assurance that your homeowners’ insurance will cover the cost of repairs.

This is why it can be especially distressing if your insurance company wrongfully denies your claim or refuses to pay the full amount you are owed. In these situations, it is important that you not lose hope. You can take legal action to collect the money you need and deserve. This is what one homeowner did, and he was recently awarded $1.3 million.

The situation started with a burglary in the man’s home. The burglar evidently broke in and then tried to erase any video surveillance that may have been recorded by leaving the bathtub faucet on and flooding the home. There was no video surveillance to begin with, but the water caused more than $100,000 in damage.

A police report was filed and the man and his five kids had to move out of the house so repairs could be performed. 

The man’s troubles had only just begun, unfortunately. According to reports, his insurance company started a fraud investigation, despite having no evidence of fraud, and then refused to cover the proper repairs. Instead, the company only paid for minimal work.

The homeowner filed a lawsuit, and the case went to trial where a jury awarded the man $1.3 million. The $300,000 awarded was for compensatory damages and $1 million was for punitive damages resulting from bad faith practices by the company.

This case serves as a good example of how effective it can be to hold an insurance company accountable when they engage in wrongful denials or delays. Instead of just paying what a policy covers, insurance companies may try to shortchange homeowners in an effort to protect their bottom line. As this case illustrates, that can be a costly mistake.

If you feel you are the victim of bad faith insurance practices, then investigating your legal options with an attorney can prove to be a valuable decision.

Getting in a car accident, having your home destroyed in a storm or losing a loved one in an accident are all tragic, life-changing events. The devastation each one can cause is often overwhelming, and people going through these difficult times typically have a hard time figuring out how they will ever recover.

Imagine being in this position and then learning that the insurance policy you thought was going to protect you and your loved ones actually will not. This is the experience too many Texans go through when their insurance company delays or denies a claim. In some cases, this is a truly unfortunate — but honest — situation; in other cases, it is an example of bad faith.

Bad faith is an intentionally deceptive or dishonest action. However, in the context of an insurance claim, it can be very difficult to distinguish between bad faith and unfortunate. Below are some examples of failed duties by insurance companies that can warrant bad faith claims.

1. Failure to conduct a proper investigation within a reasonable time could constitute bad faith. 
2. Failure to pay you at all or up to your coverage limit could constitute bad faith.
3. Failure to provide you with defense to claims under your policy could constitute bad faith.
4. In some jurisdictions, failure to settle reasonably can be considered bad faith.

We hope that this illustrates the fact that bad faith claims are not simply claims that are denied or delayed. They are claims that an insurer has not provided what was promised or fulfilled their duty as an insurer.

If you feel your insurance company has violated your rights as a policyholder, robbed you of benefits you deserve or failed to provide the coverage you were promised, it would be wise to consider discussing the situation with an attorney. A legal representative familiar with Texas bad faith laws can examine your case and help you pursue any compensation you may rightfully deserve.

When it comes to claims involving insurance contracts, some of the most important factors in whether a company will have to pay a claim is based on the definition of the terms of that insurance contract.

The Texas Supreme Court recently decided a case that found based on the terms of the contract that a fence attached to a home was considered part of the “dwelling.” This was significant because the homeowner had 4,000 linear feet of fence that was heavily damaged by Hurricane Ike in 2008. The claims adjuster found they had suffered $70,449.02 in damage to “other structures” that included the fence. The policy included a $24,720 limit for “other structures” and their damage exhausted that policy limit far below their actual losses.

The Supreme Court found that the policy lacked definitions for the terms “dwelling” and “other structures.” The policy’s dwelling provision included structures that were attached to the dwelling, and the homeowners argued this included the fence because the fence was attached to the house in four locations. The Court agreed this matched the plain meaning of the words used in the policy.

The court remanded the case back to the trial court to determine if a fence connected to another fence that was attached to a dwelling constituted an “other structure” or not. As this case demonstrates, definitions of terms in your insurance contract are very important.

If you are uncertain whether a term includes items on your property that you assume will be covered by your policy, you should request, in writing, clarification from the insurance company. In this case, the fence damage was calculated to be more than $56,000. If you have some item that presents a significant level of exposure, you should confirm that your policy would provide adequate coverage.

A homeowner’s policy is a necessary cost of owning a home. For most people, it is a condition of your mortgage contract and failure to maintain insurance on the home could lead to a mortgage default. The basic policy is designed to provide protection for the physical structures on your property.

Should they suffer damage caused the severe weather that frequently strikes in the Dallas-Fort Worth region of North Texas, many homeowners rely on those policies to repair storm damage or rebuild their homes if they were destroyed by a tornado. Having a homeowner’s policy provides the comforting thought that if your home suffers significant damage, you would not have to attempt to pay for the repairs out of your own pocket.

But one aspect many homeowners fail to understand until they receive a Notice of Cancellation or Nonrenewal from their insurer is that claims on your policy can have a detrimental effect on your status as a policyholder.

If you make too many claims in a given year or too large a claim, it may place you in the position of having your policy canceled by the insurer. Having too small a deductible can leave a homeowner feeling as if they should make a claim every time they suffer any damage.

This may not be a good idea, as your policy costs more for the low deductible, and frequent claims could trigger a cancellation. It could also lead to delays or even a bad-faith refusal to pay a claim, as the insurer may attempt to characterize your claims as fraudulent. This could delay your repairing or rebuilding your home and force you to sue your insurer in an effort to obtain the coverage for which you have paid.

The beginning of a new year is a good time to reassess your situation in many areas. You may feel you need to lose weight, exercise more, find a new job or some make some other significant change in your life. Even if you aren’t ready to commit to a major change, a milestone like the January 1 may be useful as an incentive to do some of those things you should do, but just never seem to have the time.

For instance, a whole-house inventory of your possessions. As deadly storms in the South demonstrated last weekend, just because it is January does not mean tornados and other severe weather is not possible this time of year. While the Dallas region is less likely to experience tornados and hailstorms, they are not all that rare, and strong storms with lightning may have set fire to a home in Parker on January 2. The area has also just marked the anniversary of the Garland tornado that killed nine people the day after Christmas in 2016.

A major disaster, like a tornado or a fire can utterly devastate your home. In the aftermath, there may be little left but debris and rubble. At that point, it is too late to try catalog the contents of your home. This is why a detailed home inventory can be valuable when making an insurance claim on your homeowner’s policy, and even more valuable, should an insurance dispute or bad faith behavior arise concerning your claim.

It is best to be methodical, working from one room to the next, providing as much information as possible about the items in the room. Taking comprehensive photos and video can also ensure that you won’t forget items and that the condition of the item is visible and clear.

Simply making the inventory is not enough. If you keep it in your home, it too could be destroyed. You should make multiple copies and keep one or more at a different location, one of which should be a very secure location, such as a bank safe deposit box.