Keller had property insurance with State Farm. Keller made a claim for hail storm damage. Keller sued State Farm alleging, among other things, improper handling of the claim and for allegations of bad faith and statutory violations of the Texas Insurance Code. State Farm filed a motion for summary judgment on the bad faith and statutory violations.
An insurer holds a duty to deal fairly and in good faith with its insureds. An insurer breaches this duty and will be liable if it knew or should have known that it was reasonably clear that the claim was covered. Consequently, under this reasonably-clear standard for determination of liability, an insurer breaches its duty of good faith and fair dealing by denying a claim when the insurer’s liability has become reasonably clear.