When you pay your insurance premiums, you assume your insurance company will cover you if you need to file a claim. That is how insurance works, after all. Too often, however, insurers try to avoid paying claims or try to pay as little as possible. So, what can you do if your insurer refuses to pay? In Texas, you may have a bad faith insurance claim.
What does your insurance policy cover?
Insurance companies will often argue one of two things when responding to your claim:
- That your policy does not cover the damage for some reason
- That even if your policy does cover the damage, they don’t owe you as much as you claim
Both of these excuses could be bad faith, which the company uses to underpay, deny or delay your payment. The insurance company counts on you not understanding your own policy so that you do not question their denial. They may point to some exclusion in your policy to blame the denial on. For example, many policies do contain exclusions for things like flooding or earth movement, requiring you to buy separate coverage for such events.
Understanding the cause of the damage
When trying to figure out if the event that caused the damage is covered in a policy, you may find that it was actually a series of events that led up to the damage. So, which one is to blame? Insurance lawyers use the term “efficient proximate cause” when referring to the main cause of an event. This may or may not be the last thing that happened in the series of events.
There are a few steps you can take on your own, including:
- Request a written explanation of the company’s reason for denying the claim, including the relevant policy provisions and facts.
- Review the letter for their explanation and see how it compares to your own understanding of the events.
- Either write to the company yourself or have an attorney write to dispute the reason for the denial.
Sometimes this is enough to make the insurance company realize you know your policy and your rights and pay the claim. If you still face obstacles, you may want to have an insurance law attorney take a look at your policy and the insurance company’s response, if you have not yet done so. You could have a legal claim for bad faith.