We have property insurance for a reason. When circumstances out of our control destroy our property and belongings, we expect our insurers to step in and recalibrate our lives. Sometimes, however, they do the exact opposite. Frequently, insurance providers outright deny or refuse to process claims from their policyholders. What happens when our insurer rejects our claim or disputes the severity of the damage? You can choose to appeal the decision, but often the situation can become prolonged even further. An instance like this can leave you in great distress without coverage for an extended period. Although most insurance claims are solved satisfactorily, sometimes insurance companies act in bad faith.
Ask anyone that has had to battle with their insurer for coverage their entitled to, and they’ll tell you just how stressful and demoralizing it is. The world we live in is dynamic, uncontrollable, and at any moment, an accident can arise that can cause tremendous amounts of damage to your home or place of business. That potential for disaster is something we must accept, but we make the responsible decision to mitigate that risk with insurance. But when insurance companies act with bad faith, recovery can seem impossible.
Bad Faith Adjusters
Take, for example, the case of Barbara Technologies Corp. discussed in the article above. After sustaining nearly $200,000 in hail damage during a massive storm in 2013, the company filed a claim with their insurance. However, the insurance company rejected to pay out any money as they determined the damage was almost $2000 short of their $5000 deductible, which totaled at $3,153.57. As a result of this, the policyholder(s) filed a lawsuit against their insurer.
In direct response to the suit, the insurance company hired a team of adjusters to conduct its investigation of the damage. Their estimated cost of damage totaled $195,345.63, which mirrored the claim of the policyholder. Shortly after that, the insurance company issued payment for that amount. However, Barabara Technologies Corp didn’t drop their lawsuit. Instead, they claimed their insurer had failed to meet the standards set out in the ‘Prompt Payment of Claims’ Act.
The lawsuit centered on the insurance company’s unfulfilled obligation to process, accept or reject, and pay for, the submitted claim promptly. Texas law requires an insurance company’s claim response within 15 business days of submission, but the timeline can be extended depending on the circumstance. The insurance company is legally obligated to issue an acceptance or rejection after no more than 45 business days.
During this time, the insurance company is allowed to gather the assistance needed to determine the validity and severity of the claim. The insurer must swiftly work because policyholders are almost always vulnerable due to the circumstances requiring them to make a claim.
New State Supreme Court Ruling
Previous court rulings had stated paying out of an appraisal would absolve the insurance company of consequence for not meeting the time-oriented legal obligations set out in the Texas Statutes. Since the insurance company, in this case, had paid out the amount from the appraisal, that should have ended any legal dispute. This time, however, the Texas Supreme Court weighed in.
The Supreme Court issued a declaration that effectively severed the direct connection between claims adjustment and appraisal. Their determination opened insurance companies up to litigation based off of their actions during the claims process.
According to the article linked above, one of the attorneys for the policyholders stated that before this ruling insurance companies would “weaponize the appraisal” so they can delay paying for valid claims. This manner of business can wreak havoc on policyholders’ lives and represents one of the unfortunate downsides of the insurance industry.
Insurance is a business, plain and simple. If insurance companies cannot make a profit, they cannot sustain their business model. For insurance companies to be successful in the market, they must make more money than they give out. This motivation is the uncomplicated reasoning behind a wealth of complex processes that serve to reduce the monetary obligation that insurance companies have to their policyholders.
As with any insurance dispute, the best course of action is to contact an experienced insurance attorney that can advise you on how to pursue the compensation you are entitled to.
