When insurers fail to uphold their duties and obligations to policyholders, they are acting in bad faith.
As an insured person, you can pursue a bad-faith insurance case to rectify the situation. However, these cases are often complex, and it can benefit you to be familiar with the common mistakes that can impact a bad faith claim.
Waiting to take legal action
If your insurer acts in bad faith, you should promptly address the situation. In Texas, the law allows policyholders up to two years to bring a bad faith claim against an insurer. There is a statute of limitations that typically starts whenever the insurer’s deceptive or unfair practices began. In some cases, the two-year limit can start when the insured party discovers the misconduct. It can be difficult for your bad faith case to succeed if you wait too long.
Lack of documentation
Maintaining an organized, comprehensive log of all your interactions with your insurer makes it easier to prove your case. You should keep relevant documentation and email exchanges with your insurer. You can also record details from any verbal conversations that occur.
Accepting unfair settlements
Some insurers attempt to resolve bad faith claims quickly by offering the policyholder a settlement. If you are not experienced in dealing with insurance companies, you might accept an unreasonably low offer for your case. It is crucial to negotiate and fight for the compensation you deserve.
Although going through a bad faith insurance case can be difficult, there are steps you can take to avoid common pitfalls and increase your chances of obtaining a favorable outcome.