Texas Bad Faith Insurance Law: What You Need to Know
Texas bad faith insurance law is codified in the Texas Insurance Code § 541 and is among the strongest consumer protections in the country. Understanding what constitutes bad faith, and what damages you can recover, is essential if your insurance claim has been improperly handled in Houston or Harris County.
Bad faith occurs when an insurer fails to act in good faith and deal fairly with a policyholder—specifically, when the insurer's conduct is unreasonable given the facts and circumstances known to the insurer. This includes: denying a claim without reasonable investigation, misinterpreting policy language in a way that no reasonable insurer would, failing to promptly pay valid claims, delaying investigation without cause, or making unreasonably low settlement offers. Texas courts have consistently held that insurers must conduct a reasonable investigation and act promptly on valid claims.
Under the Texas Prompt Payment Act, insurers must pay undisputed claims within 15 days of receipt. When they fail to do so, additional penalties apply. More importantly, Texas law allows policyholders to recover not just the denied claim amount, but also attorney's fees, court costs, and damages for mental anguish and economic loss caused by the insurer's bad faith. At CDF Law, we use these statutes to hold insurers accountable and pressure them toward fair settlements.
If you believe your insurer has acted in bad faith, call CDF Law at (832) 945-1900 for a free consultation. We serve claimants throughout Houston and Harris County, and we work on contingency—no fee unless we recover damages for you.