Lawyers handling insurance claims that have been denied frequently have a conversations with clients about “bad faith” insurance. Bad faith, generally speaking, often times centers around whether or not an insurance company has committed a fraud.
If allegations of fraud are going to be alleged, insurance lawyers need to understand that those claims that end up in a Federal Court are subjected to a higher pleading standard than those claims that are litigated in State or County Courts. This is illustrated in a 2021, opinion from the Southern District of Texas, Galveston Division. The opinion is styled, Smiley Team II, Inc. v. General Star Insurance Company.
Smiley made a claim against General Star after a vehicle was alleged to have crashed into Smiley’s building. A lawsuit was eventually filed containing allegations that General Star failed to properly adjust the claim which resulted in an alleged underpayment of the claim.