Flint & Soyars PC
Statute of Limitations for Bad Faith Insurance
Bad faith insurance is a type of legal claim that is, for the most part, unique to the United States. Put simply, bad faith insurance claims consist of a policyholder accusing an insurance company of acting in bad faith with their contract. The concept of “good faith” exists within the United States legal framework and is used to ensure that companies do not take advantage of their consumers through poorly worded contracts. Unlike other types of claims, insurance bad faith claims can actually be handled as tort claims in addition to contract claims. Through this distinction, additional damages may be awarded to a claimant, since the United States does not allow for punitive damages on contract claims, but they do allow it for tort claims.
Despite the complexity that is commonly associated with insurance bad faith claims, this guide will aim to streamline this information and make it as easily digestible as possible. In addition, it will take a look at how the statute of limitations applies to insurance bad faith claims. Of course, as always, anyone interested in filing an insurance bad faith claim in the Texas area should seek out an experienced lawyer in Texarkana TX. They can offer better insight into your specific case and provide a more comprehensive look into the claim type.
Unfortunately, it can be somewhat difficult to generalize insurance bad faith claims in the United States, since each state has their own laws on how such a claim is handled. There are few actual federal laws governing how insurance claims are handled, since a 19th century court case held that the federal government had no such say in the matter. While there have been some attempts by Congress to ignore this restriction in the past, it has been difficult to overcome.
As a result of the state’s role in maintaining the insurance industry, each state has its own Department of Insurance, or similarly titled organization. Through this department, the state enforces its specific insurance code, which contains all of the state’s rules and stipulations associated with insurance.
When a case goes through the state’s court system, it is typically handled based on previous court rulings. Some states have attempted to move most of their contract laws into statutory laws, but this is really only prominent in places like California or Georgia.
The state court system is further complicated by the fact that different states have different definitions of how insurance can be handled in bad faith. For instance, in a place like California, it is only necessary to prove that the insurer was aware of at least one claim that was covered by the policy in some capacity in order to be liable for all of it. Unfortunately, those in Texas have a much harder time. Texas uses an “eight corners” rule to determine whether an insurer is responsible for covering the insured. Put simply, the “eight corners” rule comprises two documents: the complaint and the insurance policy.
Since it’s considerably more difficult to win an insurance bad faith claim in a place like Texas, it makes it all the more valuable to have a knowledgeable lawyer in Texarkana TX on your side.
Although most people tend to think of insurance bad faith in the case of unpaid medical bills, it can also apply to court fees, depending on the type of insurance policy being enacted. It is for this reason that many insurance companies attempt to take control of any lawsuits that involve one of their policyholders, so as to avoid paying further costs after a loss.
Under these circumstances, a bad faith lawsuit can result from an insurance company’s failure to properly represent its clients in a lawsuit, or their failure to pay out any costs that are associated with the proceedings. It may not be as highly publicized as the health insurance alternative, but it’s still just as important to keep in mind when building a possible insurance bad faith case.
Since there aren’t many statutes that exist to rigidly define bad faith, especially at the state level, much of the concept is instead defined based on previous cases. As a result, there are a wide variety of possibilities when it comes to determining whether an act was in bad faith or not, including improper claim handling, refusal to support a lawsuit or cover its costs, or making actual threats against the insured to prevent them from filing a claim. As always, there are plenty of other circumstances that may also qualify, and it is best to seek out an expert in the field to determine whether or not it applies to your specific situation. Since insurance bad faith is defined based on previous casework, the definition can continue to grow and evolve as time passes and new cases enter the court.
When it comes to paying for an insurance bad faith claim against an insurer, it’s up to the policyholder to determine the form of payment for the attorney. While some states provide additional protections to the plaintiff in the form of additional payouts for legal services, other states are not as lucky. If you’re looking at attorneys in Texas, some might try to get you to pay up-front for the costs of the litigation, but this isn’t the only option. Instead, try to seek out an attorney that is willing to take on the case through a contingent-fee basis. This minimizes the risk associated with the legal proceedings and ensures that the insurance company is held accountable for any legal fees that eventually accrue over the course of the period.
Despite all of this legal complexity associated with insurance bad faith, there is some good news. Given the length of time that these court cases can take to resolve, there isn’t really any limit on how long ago a contract dispute could have occurred. There have been cases in the United States of bad faith claims taking up to 22 years to resolve. Nowadays, most bad faith claims tend to revolve around the existence of toxic mold on a property. Decades ago, this claim wasn’t particularly popular, and it wasn’t particularly profitable either. But today, the claim has helped people recover millions in damages from insurance companies and has grown in prominence as more people have become familiar with the mold type.
If you’re unsure of whether or not you’ve been unfairly treated in a contract, then the best step to take is to contact a lawyer. Since most firms offer a free consultation in bad faith cases, it doesn’t hurt to get a second opinion. After pouring a considerable amount of money into your insurance contract, you deserve to have it implemented in a fair and honorable manner by your insurance company. Don’t let them take advantage of your goodwill and then handle your contract in bad faith. Instead, take action and ensure that your interests are properly represented. Bad faith may be defined differently from state to state, but it is ultimately always designed as a protection for the consumer against the poor behavior of insurance companies.