Lawyers for Insurance Claim

Insurance Companies Have Legal Duties Related to Fair and Prompt Handling of Claims:

In Texas, when insurance companies are adjusting their customers’ insurance claims, they owe their insured’s a common law duty of good faith and fair dealing as well as statutory duties codified in Chapters 541 and 542 of the Texas Insurance Code.  This duty originated in common law (from court case decisions rather than by statute) when the Texas Supreme Court first recognized a covenant of good faith and fair dealing between an insurer and its insured’s based upon the parties “special relationship.”  The public policy underlying the duty of good faith and fair dealing is that insurance companies are in a position to gain an unfair advantage over their insured’s because of their superior knowledge, resources and bargaining power and therefore they have a “special relationship” with their policyholders and owe them a duty of good faith and fair dealing.

Insurance Claim Texas

In some instances, an insurance claim can be simple. For example, if your windshield shatters and your have auto coverage for this type of damage, you can make one phone call, explain the situation, and have a windshield repair professional install a new windshield in a few days, or in some cases, that same day.


But many other types of insurance claims are fraught with difficulties that may require the assistance of an experienced trial lawyer. People purchase insurance to protect themselves from the unexpected – illnesses, accidents, property damage and even natural disasters.  Unfortunately, it is not unusual for insurance companies to undervalue, underpay, delay or even completely deny payment of a claim without proper justification or warning.  For this reason, it is important that insurance policy holders understand their legally protected rights.  Below is a breakdown of the most common types of insurance claims.

Common Types of Insurance Claims 

Insurance claims come in all shapes and sizes, but there are some common types of claims, including:

  • Car Accident Claims – this can include damage to a vehicle, damage to property caused by a vehicle, personal injury resulting from an accident, and coverage for a rental car during the loss of use of the damaged vehicle.
  • Health Insurance Claims – this can include claims for hospital stay, lab tests, visits to a doctor, rehabilitation costs, surgeries and prescription medication.
  • Homeowner Claims – this can include damage due to fire, wind, robbery, and vandalism.
  • Natural Disaster Claims – this can include damage caused by flood, hail, wildfires, tropical storms, tornados, hurricanes, blizzards and earthquakes.


Third Party Claims

A third party claim is one where a claim is made or a lawsuit is filed by a third party against an insured.  A common and easy to understand example of a third party claim is a typical personal injury lawsuit arising from car wreck.  Say for example, two vehicles are involved in a car wreck and one of the drivers sues the other driver.  The driver who was sued would report the lawsuits to his/her automobile insurance carrier and assuming the claim is covered by the insurance policy, the insurer will hire an attorney to represent the insured and defend him/her against the allegations and claims asserted in the lawsuit filed by the other driver, pay the attorney’s legal bills and ultimately, if necessary, pay money on behalf of the insured pursuant to a settlement or bench or jury verdict.  Sometimes there is a question whether or not a third party lawsuit is covered by an insurance policy, which is called determining whether an insurance company owes a “duty to defend” it’s insured.

The duty of good faith and fair dealing that the insurance company owes to its insured when dealing with a third party claim against one of its insured’s is often referred to as the Stowers Doctrine, and it requires the insurance company to exercise that’s degree of care and diligence which an ordinarily prudent person would exercise in the management of his own business in determining whether to accept a settlement offer made to it.  This duty (commonly known as the Stowers duty) is activated when a settlement demand is made that meets the following criteria, (1) the claim against the insured must be within the scope of coverage; (2) the demand musts be within policy limits; and (3) the terms of the demand must be such that ordinarily prudent insurer would accept it, considering the likelihood and degree of the insurer’s potential exposure to an excess judgment.

In determining whether the claimant’s demand was reasonable under the circumstances, along with the other fact5ores a judge or jury would consider how the claim investigation was conducted, the trial defense, and the insurer’s conduct during settlement negotiations.  Nevertheless, the ultimate issue to be determined is whether the claimant’s demand was reasonable under the circumstances such that an ordinarily prudent insurer would have accepted it.

First Party Claims

A first party claim is a claim made by an insured to his/her own insurance company.  A common example of a first party claim would be if an insured’s roof was damages by a hailstorm and the insured then submits a claim to his/her homeowner’s insurance carrier for the damage done to the roof.

The duties that an insurance company owes to its policyholders when adjusting first party insurance claims is currently found in Chapters 541 and 542 of the Texas Insurance Code.

Chapter 541 sets out Unfair Methods of Competition, Unfair or Deceptive Acts or Practices that insurance companies should not engage in, as well as Unfair Settlement Practices, which includes things like: misrepresenting a material fact or policy provision; failing to attempt in good faith to effect a prompt, fair and equitable settlement where the insurer’s liability has become reasonably clear; failing to provide a policyholder with a reasonable explanation of why a claim was denied or offer of compromise; and refusing to pay a claim without conducting a reasonable investigation.

Chapter 542, subchapter B of the Texas Insurance Code is also known as the “Prompt
Payment of Claims Act” and it provides insurance companies a blueprint for acting in “good faith.”  For example, not later than the 15th day or, if the insurer is an eligible surplus lines insurer, the 30th business day after an insurer receives notice of the claim, the insurer shall: (1) acknowledge receipt of the claim notice; (2) advise that an investigation of the claim is being commenced (and begin the investigation); and (3) ask the insured to provide the insurance company with documents and information necessary to adjust and evaluate the claim.

Once the request is made, the burden is now upon the insured to provide the insurer with the requested documents or information and after the insurer has received all the information its requested, it then has fifteen (15) business days (or 30 calendar days for arson claims) in which to make a decision on the claim.  If the insurer is unable to complete its evaluation of a claim within that time, it may request up to 45 additional calendar days (Note:  not business days) in which to continue its evaluation of the claim.  This request for additional tine must be made in writing and provide the insured the reasons why such additional tine is necessary.  The insurer does not need the consent of its insured for such an extension, but it must give reasonable grounds for obtaining the additional time.

The insurance companies decision must be made at the end of the 15/30 days or the additional 45 days, which is applicable.  If the decision is made to pay the claim payment must be submitted to the insured within 5 business days.  If the claim is denied, the denial must be in writing to the insured, stating the specific reasons for denial.

Liability For Violating Chapters 541 and 542 Of The Texas Insurance Code

Section 541.152 of the Texas Insurance Code entitled, “Damages, Attorney’s Fees, And Other Relief” provides that a plaintiff who prevails in an action under this subchapter may obtain: (1) the amount of actual damages, plus court costs and reasonable and necessary attorney’s fees; (12) an order enjoining the act or failure to act complained of; or (3) any other relief the court determines is proper.  If the trier of fact finds that the insurance company (except for claims brought against the Texas Windstorm Insurance Association) knowingly committed the act complained of, the trier of fact may award an amount not toe3 exceed three times the amount of actual damages.

Section 5412.060 of the Texas Insurance Code, entitled “Liability For Violation Of Subchapter” provides the penalties for insurers who are found to have violated the subchapter and they are, in addition to the amount of the claim, eighteen (18%) percent interest per year on the amount of the claim that should have been timely paid but wasn‘t, and reasonable attorney’s fees.


After you suffer some type of loss or damage, you will make a call to your insurance company’s claim department reporting what happened. Your insurance company will take down all the details of your loss or damage and investigate the claim by assigning it to an adjuster.

The adjuster will examine the loss or damage, interview witnesses and gather all information relevant to the claim, such as police reports (in a car accident claim), or medical documents (in a health insurance claim).

If the adjuster finds that the claim is legitimate, your insurance company will initiate reimbursement or repair authorization. But the truth is that many insurance claims do not go this smoothly, and you may need to hire a personal injury lawyer. This is especially true if you are involved in a car accident that was not your fault, because often times, the other party’s insurance company will prove to be an obstacle in settling a claim.

Protect Your Rights In an Insurance Claim 

After you’ve suffered injuries or a major loss, and you are unsure how your insurance company or the insurance company of a responsible party will handle your claim, protect your rights and hire an experienced personal injury law firm such as the team at David K. Wilson & Associates. Please call us today at 903-870-9050 for a free consultation about your legal options.