Let’s say your house in Dallas burns down and the insurance company wrongfully denies your claim. Or your boat in Weatherford sinks in the lake and your insurance company tries to tell you they are not going to pay because of a late payment on your insurance policy. How about you are driving your car in Fort Worth and are involved in a wreck and your insurance company denies coverage due to the car not being properly listed on the policy. Another example, your neighbors wife, in Grand Prairie, dies of an illness she has had and when the husband makes a claim for life insurance benefits he is denied because the insurance company says they committed a fraud in the application for coverage.
Okay, now lets say you can prove the insurance company was wrong in each of the above situations. What next? Do they just pay the benefits and go away? What about the extra heart ache you went through? What about the ten month delay in paying you the benefits you were entitled to? What about legal expenses? Can the insurance company just intentionally do you wrong and get away with it, by just paying what they should have paid in the first place?
Here are some answers. First, get to an experienced Insurance Law Attorney to help you. Then if you are so inclined, go to the Texas Department of Insurance web-site and read a few of the rules the insurance companies have to follow.
Here are some applicable laws that the Insurance Law Attorney will tell you about. Texas Insurance Code, Section 541.152, says when an insurance company is found to have violated or committed an unfair or deceptive act, that the prevailing party is entitled to recover from the insurance company, 1) the amount of actual damages, 2) court costs, 3) attorney’s fees, and 4) “any other relief the court determines is proper”.
On a finding by a Judge or Jury that the wrong was committed knowingly, there may be an award of an amount not to exceed three times the amount of actual damages. Knowingly is defined in Section 541.002, as “actual awareness of the falsity, unfairness, or deceptiveness of the act or practice.
Texas Insurance Code, Section 542.060, applies when an insurance company is late or slow in paying a claim. What is late or slow is determined by the facts in a particular situation. Section 542.060 allows recovery for attorneys fees plus interest at 18% a year as additional damages. A pretty good rate of return.
Additional damages, or punishment for the insurance company caught doing wrong can be found outside of the Insurance Code. The Texas Civil Practice & Remedies Code, Section 41.003, says an award of “exemplary damages” may be had where there is clear and convincing evidence that the harm a person suffers is the result of, 1) fraud, 2) malice, or 3) gross negligence. Texas Civil Practices & Remedies Code, Section 41.008, allows recovery but not to exceed, “two times the amount of economic damages: plus an amount equal to any noneconomic damages, not to exceed $750,000: or $200,000. These limitations do not apply in certain instances where certain defines criminal offenses were committed.
As can be seen, there are big penalties for insurance companies that do their policy holders wrong. What is important, is getting an attorney involved early when the insurance company is committing wrongs.