Water Damage: How To Navigate Bad Faith Insurance
After experiencing water damage from a flood or storm, dealing with a delayed, denied or insufficient insurance payouts can be frustrating. Fortunately, Texas law protects policyholders from bad faith insurance practices. Here are some important details.
Understanding bad faith insurance
Bad faith insurance refers to an insurer’s attempt to evade their obligations without a valid reason. Examples related to water damage from natural disasters include:
- Refusing to pay a legitimate claim
- Offering a settlement far below the necessary repair costs due to a flood or storm
- An adjuster ignoring or minimizing visible water damage while delaying an inspection
- Misrepresenting policy provisions or terms to policyholders to avoid paying claims
It is important to note that a simple error or a legitimate disagreement over the value of a claim does not automatically qualify as bad faith insurance.
Protection under Texas law
Texas provides legal protection through two chapters of the Texas Insurance Code (TIC):
- Chapter 541 prohibits unfair competition and deceptive practices in the insurance industry. Violating this chapter can lead to a statutory bad faith claim.
- Chapter 542, known as the Prompt Payment of Claims Act (TPPCA), establishes strict deadlines for insurers. For example, insurers need to acknowledge a claim and start investigating it within 15 days of getting the notice. If they approve the claim, they must pay the policyholder within five business days after receiving the final settlement amount notice.
If an insurer delays payment for over 60 days after getting all necessary information, they face penalties under the TPPCA. This includes paying interest on the delayed amount and covering attorney fees. The interest rate is usually 18% per year for non-weather-related claims, but a different rate applies for claims due to natural disasters.
If You Suspect Bad Faith Insurance…
Begin by thoroughly documenting all evidence, including photos of the damage and a detailed log of every communication (dates, times, names) with the insurance company and adjusters. Given the legal complexity and the severe penalties involved, reaching out to a knowledgeable attorney for guidance through the process is highly advisable.
Call Our Water Damage Lawyers to Discuss Your Claim Today
Don’t let water damage derail your life or business. If you’re struggling with a water damage insurance claim, we’re here to help. Contact The Hodge Law Firm, PLLC, today for a free consultation. Call us at 409-762-5000 or visit our online contact page to schedule your consultation.
