Frequently Asked Questions

Insurance is confusing. You are involved in a binding contract with an insurance company that includes wordy and complex verbiage, making your agreement difficult to understand. Because of the complicated contract, you are unaware of what your policy covers, nor are you aware of your rights as a policyholder.

For your convenience, LeMaster Law Firm answered some frequently asked insurance questions. This information should not be taken as legal advice. Contact an insurance lawyer if you are having a difficult time negotiating with adjusters.

Attorney Gives Answers to Insurance Questions in Texas

Having an attorney guide you through the claims process will cut back on confusion and increase your chances of a greater settlement. The attorneys at LeMaster Law Firm have extensive experience negotiating with insurance companies. They will use this experience to your advantage to ensure you receive every penny you are entitled to.

Call 832-356-7983 to schedule a case evaluation. Ms. LeMaster and Ms. Ahmed will review your case and help you decide the best course of action. The lawyers at LeMaster Law Firm represents clients throughout the greater Houston area including Galveston County, Harris County, Montgomery County, Collin County and Dallas County.

Information Center

• What Does Homeowner’s Insurance Cover?
• What are the Levels of Commercial Property Insurance?
• What is the Difference Between Replacement Cost and Actual Cash Value?
• What Are Bad Faith Practices?
• Can I Sue My Insurance Company?
• Additional Resources

What Does Homeowner’s Insurance Cover?

Texas homeowners know their home insurance covers damage to their home. But most don’t know their policy covers more than that. Keep in mind; not all insurance policies are the same, but they generally include the following types of coverage:

• Structure damage: Homeowner’s insurance will only cover damage to a home that was caused by a risk or peril covered under the policy. Structure damage also covers damage to property attached to a house and unattached property such as a garage, porch or garden shed.

• Personal property damage: Most homeowner’s insurance providers will cover the cost to replace damaged, destroyed or stolen personal property. A home policy will only cover personal property up to a certain value. You will need to purchase additional coverage for high price items such as collectibles and jewelry.

• Loss of use: Loss of use coverage pays for living expenses if you have to move while your home is being repaired. Your homeowner’s policy will cover any living expenses you would not have to pay if you were still living at home, such as hotel bills and rent.

• Medical coverage: Homeowners insurance will also cover medical bills incurred from people injured on your property. This type of coverage may also cover certain injuries that take place away from home.

• Personal liability: This type of coverage will pay for medical bills and other expenses for people you are legally responsible for injuring. Personal liability coverage also covers court costs and damaged you caused to another’s property.

Homeowner’s insurance will only cover certain types of damage such as fire, water, theft and lightning damage. A standard home policy will not cover damage caused by flooding, mold, backed up sewage and rodent infestations, to name a few. Read through the declaration of your policy to gain a better understanding of what your policy covers.

What are the Levels of Commercial Property Coverage?

Commercial property coverage is designed to pay to replace or repair your building and business property that is damaged or destroyed. This type of coverage comes in three “levels,” according to the Texas Department of Insurance.

Listed below is a brief explanation of the three levels of commercial property damage:

• Basic form policy: This level provides the least coverage. A basic form policy covers damage caused by:
  • Fire
  • Windstorms
  • Hail
  • Lightning
  • Explosions
  • Smoke
  • Vandalism
  • Sprinkler leaks
  • Aircraft and vehicle collisions
  • Riot and civil commotion
  • Sinkholes
  • Volcanoes

• Broad form policy: A broad form policy covers the losses included in a basic policy as well as damage caused by theft, falling objects, leaking appliances, structural collapses and the weight of snow, sleet and ice.

• Special form policy: This level of protection provides the most coverage. A special form policy covers damage from all causes of loss, except for policy exclusions. Most commercial property insurance excludes coverage for damage caused by floods, war, wear and tear, earth movement, nuclear disaster and insect and rodent infestations.

What is the Difference Between Replacement Cost and Actual Cash Value?

Insurance companies will use two different methods, replacement cost and actual cash value, to determine how much they will pay for damaged, destroyed or stolen personal property. From the insured’s point of view, replacement cost is the more favorable figure because it compensates the property owner for the actual cost of replacing the property.

Assume a stove was damaged in a fire. A replacement cost policy will reimburse the owner for the full cost of replacing the damaged stove with a new one of similar model. The insurance company will not consider any amount of wear and tear when determining how much the stove is worth.

In contrast, actual cash values, also known as market value, is the standard reimbursement procedure for insurance companies. The actual cash value equals the replacement cost minus any depreciation, or the dollar amount you would expect if you sold the property. Depreciation is determined based on several factors such as the type of property, how old it is and visual wear and tear. In the case of the damaged stove, an adjuster would deduct from the replacement cost and wear and tear endured before the fire.

What Are Bad Faith Practices?

Insurance companies are in a position of power and have an unfair advantage over the insured because of their superior knowledge, resources and bargaining power. Texas legislatures understand this and make it illegal for insurance companies to act in bad faith towards an insurer. Bad faith practices come in many forms, such as:

• Refusing to pay a claim without a reasonable investigation
• Failing to explain with a claim was denied
• Failing to deny or confirm coverage within a reasonable time
• Failing to provide a prompt, fair and equitable settlement
• Require you to provide a copy of your tax returns as a condition of a settlement
• Misrepresent policy provisions or information relating to the claim
• Deny a claim or charge more because of:
  • Race, religion, color or national origin
  • Age, gender, marital status, geographical location or disability
  • Credit score

Can I Sue My Insurance Company?

Dealing with property damage or other misfortune is hard enough. When you are forced to battle with your insurance company on top of that, the situation becomes even more taxing. Thankfully, Texas law is designed to protect policyholders and allows you to sue your insurer if you believe they have handled your claim in bad faith.

By suing your insurance provider, you can seek damages for up to three times the cost of your original claim and for attorney fees, though filing suit against your provider is not easy. You will have to prove your insurance provider acted in bad faith, which can be hard to prove without evidence. To better protect yourself, it is wise to take note of every conversation you have with your insurance company.

It may also be in your best interest to engage an insurance lawyer early. An insurance attorney can negotiate on your behalf and ensure the claim is handled in good faith. In the event the claim is handled in bad faith, your attorney will already be well up to date on your case and prepared to represent you in court.

Additional Resources

Commercial Property Insurance | Texas Department of Insurance – Visit the Texas Department of Insurance website to learn more about commercial property insurance. By accessing the site, you can gain access to basic information about the protection, learn more about replacement cost and actual cash value coverage and about additional coverage your business may need. The Texas Department of Insurance is the entity responsible for regulating insurance in the state.

Unfair Settlement Practices | Texas Insurance Code – Read the chapter of the insurance code governing bad faith practices. Scroll to section 541.060 to find a comprehensive list of bad faith practices. You can also find out what is considered misrepresentation of an insurance policy and who is immune from prosecution. The code can be read on the Texas Constitution and Statutes website.

Insurance Law Attorney in Texas

The attorneys at LeMaster Law Firm have more than three decades of experience in insurance law and they now fight only for the rights of policyholders. Whether you are a business or individual, you can trust Ms. Ahmed and Ms. LeMaster to fight for you. They will guide you through the claims process, speak with adjusters on your behalf and represent you in court if needed.

Call us at 832-356-7983 to schedule a consultation. We proudly represent clients throughout the greater Dallas Fort Worth area including Galveston, Houston, The Woodlands, Plano and Dallas.