Some business relationships feature natural tension created by the drive to generate profits. For-profit insurance companies typically have an incentive to mistreat policyholders and undermine the policies they issue. These companies make the most money when people pay their premiums without filing claims, so there is a risk of professionals intentionally denying valid claims. They may also try to unfairly reduce what compensation people receive.
To prevent misconduct by insurance companies, the government has laws regulating the insurance industry. Both federal laws and Texas state statutes require that insurance companies operate in good faith. That essentially means that a company must uphold the policies it issues and respond reasonably to claims that clearly fall under the scope of the policy.
Certain types of insurance company conduct may constitute bad faith insurance practices and could potentially lead to a lawsuit. Unfairly denied claims sometimes lead to litigation. Are unreasonable delays actionable insurance issues?
Texas has a timeline for claims
If insurance companies could delay paying claims indefinitely, many people might eventually give up due to frustration. Delays can even put people in situations where they can’t afford to fix damaged resources or secure alternate accommodations.
State statutes in Texas impose specific turnaround times on insurance companies. Typically, insurance providers have 15 business days from the initial point of contact with a policyholder to provide them with the appropriate internal documents for a claim. Then, after the claimant submits the paperwork, the insurance provider typically has another 15 days to deny or approve the claim. After approving a claim, insurance companies usually only have five more business days to pay the claim in full.
Occasionally, unusual circumstances may warrant a deviation from those standards, but there should be appropriate communication with the policyholder throughout the process. When insurance professionals ignore claims or unreasonably refuse to communicate with policyholders, that may actually be an example of bad faith insurance practices. Unnecessary claims delays are one tactic intended to deprive someone of the coverage that they deserve.
Pursuing a bad faith insurance claim when an insurance company hasn’t followed Texas state law could be a smart decision. People may need to learn more about Texas law and review their policy documents to determine if they are in a position to take legal action.