Insurance companies in Texas have long been known for being difficult when property damage claims are filed. The state proximity to the Gulf of Mexico means that inclement weather is common. The standard claim investigation policy for most companies has been to evaluate the damage to the benefit of the company and then negotiate a fair compensation amount with the claimant through two insurance appraisal firms, one for each party. Insurance provider GuideOne attempted to divert this process by inserting a bad faith insurance clause in its policies that restricted the authority of the client to request an independent appraisal.
This clausal restriction left some insured clients in a difficult situation. Commercial property owner TopDog ultimately filed a lawsuit for financial recovery along with a request for authorization of an additional bad faith claim. This legal action initiated the TopDog Properties v GuideOne National Insurance Company case that resulted in the bad faith ruling.
The Texas Supreme Court held that GuideOne National Insurance Company was indeed acting in bad faith by restricting the client from access and authority to request an appraiser on their own behalf as part of the claim negotiation process because it left the plaintiff completely at the insurance provider’s mercy. TopDog Properties had to hire an independent appraisal law firm and file suit for financial recovery while claiming bad faith tactics.
According to legal analysts, this is a real game changer for all property insurance purchasers in Texas. The court decision establishes that systemic bad faith demands made by insurers can result in additional legal action separate from the claim when insurance providers attempt to restrict the legal empowerment of clients regarding claim filings. If you’re dealing with such an issue, an established bad faith insurance law firm in Texas can investigate the claim and assess the punitive damage value.