Liability insurance is different from most other types of insurance because it pays a third party, not the policyholder, when a claim is filed.
This type of insurance provides an insured party with protection against claims resulting from injuries and damage to other people or property. Liability insurance policies cover any legal costs and payouts an insured party is responsible for if they are found legally liable.
A bad faith insurance claim is filed when an insurance company acts in ‘bad faith’ by failing to meet the standards of the agreement with the insured.
In Texas, that means the plaintiff needs to show the company was unreasonable and knew it. They may have unreasonably denied to pay a valid claim against the insurance policy, or withheld information, or failed to respond in a timely manner, or generally anything which breaches the implied covenant of good faith which exists through the insurance policy.
Bad Faith claims may be applied to any type of insurance policy.
That means it is possible to have a bad faith lawsuit filed against an auto insurance policy, a homeowners policy – or even a liability insurance policy.
In fact, third party bad faith claims are liability insurance-related.
The most common type of liability insurance with which most Texans are familiar is the liability insurance policy you may carry for your car or truck. It is designed to pay someone else (a third party) in the event a covered accident occurs.
If an accident happens, and you have caused injury to someone while operating your vehicle, your liability insurance would normally pay the injured person, not you, the value of the claim.
But suppose this is a case of bad faith, and your insurance company refuses to pay a legitimate claim against your policy. The injured person might sue you for the damages. You might then file a bad faith lawsuit against your insurer for their failure to pay the claim – at least up to the amount covered by your policy.
Insurance is designed to offer you protection and to limit or cover your losses. But it doesn’t always work that way, and sometimes a bad faith lawsuit is your best option to be restored financially.
At Carrigan & Anderson, we have an entire team who deals with bad faith insurance litigation exclusively.Contact us here through our website at CarriganAnderson.com , or call/text David at 361-980-6150. We’re on your side, and we’re here to help you seven days a week.