Articles Posted in Bad Faith Insurance

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.

Insurance agents misrepresenting the terms and conditions of an insurance policy is a common complaint.  Here is a 1994, Texas Supreme Court opinion styled, Celtic Life Insurance Company v. John D. Coats, Jr.

This case presents three issues relating to an insurance company’s liability for its agent’s representations: first, whether the company’s liability depends on its authorization of misrepresentations; second, whether reliance on the representations is an element of recovery; and third, whether the insured’s damages should be trebled when the misrepresentations were not committed “knowingly.”

This blog will focus on the first issue regarding the agents misrepresentations and the liability of insurance company.

Filing a lawsuit is not as simple as saying the words.  One common reason for suing an insurance company is based on allegations of fraud.  A 2021, opinion from the Southern District of Texas, Galveston Division, shows that pleading fraud an insurance company has to meet certain criteria or the case will be dismissed.  The style of the case is, Smiley Team II, Inc. v. General Star Insurance Company.

Smiley carried commercial property insurance with General Star.  A vehicle crashed into Smiley’s covered property and a claim was made.  Smiley complains that General Star failed to properly adjust the claim, issuing a payment that substantially undervalued the damages.

Smiley’s First Amended Complaint asserted causes of action for breach of contract and various violations of the Texas Insurance Code and the Texas DTPA.

Bad Faith insurance is a frequent topic when a person feels like they have been treated improperly by their insurance company.  This issue is discussed in a 2021 opinion from the Eastern District of Texas.  The opinion is styled, Aspen Specialty Insurance Company v. Yin Investments USA, LP.

This opinion was issued on competing Motions For Summary Judgment.  The only part discussed here deals with the “bad faith” claims at issue.

As stated by the Court, in Texas, insurance companies have a duty to deal fairly and in good faith with an insured in the processing of claims.  To succeed on a bad-faith claim, the insured must establish the absence of a reasonable basis for denying or delaying payment of the claim and that the insurer knew, or should have known, that there was no reasonable basis for denying or delaying payment of the claim.

An old Insurance Lawyer once stated about “bad faith” that if you have to have an expert to tell you whether the insurance company acted in bad faith, or not, then there probably not bad faith in whatever the insurance company did.

In 2021, a court in the Western District of Texas, San Antonio Division issued an opinion discussing bad faith.  It is styled, Richard Riley v. Safeco Insurance Company of Indiana.

The claim arises out of a claim being asserted by the insured, Riley, against his insurance company, Safeco.  The claim is for hail damage to Riley’s metal roof.  After a hail storm Riley made a claim for damages and Safeco assigned adjuster Doug Lehr to inspect the claim.  Lehr, after his initial inspection retained an engineering firm, Rimkus Consulting, to determine whether the damage to the roof was cosmetic or structural.  Rimkus determined the damage was structural.

Hee is a 2021, opinion dealing with bad faith claims by an insured and the insurance company efforts to dispose of the bad faith claim via summary judgement.  The opinion is from the Southern District of Texas, Houston Division, and is styled, GeoVera Specialty Insurance Company v. Sam Walker.

The insured is Walker.  The insurance company is GeoVera.  Walker suffered wind damage and a subsequent theft claim.  There are other issues in the case, but only the bad-faith / extra=contractual issues will be looked at here.

Geovera denied the claim and then sued Walker seeking a declaratory judgment that it did not owe any damages to Walker.

The question asked in the title is a good question.  However, it is a hard question to answer.  A 2021, opinion from the Northern District of Texas, Fort Worth Division, lends some insight into how bad faith is analyzed by the courts.  The opinion is styled, Cocanougher Asset No. 3, LLC v. Twin City Fire Insurance Company.

The facts of the case can be read in the opinion and will not be rehashed here.

Twin City filed a motion for summary judgement on the bad faith allegations of the plaintiff.  In deciding the motion in favor of the plaintiff, the court explained how these situations are analyzed.

Insurance lawyers are frequently asked, “Can you make the insurance company pay my attorney fees?”

Here is a case from the Southern District of Texas, Houston Division.  The case is styled, Shane and Shannon Richardson v. Liberty Insurance Co.

Most case, over 98%, get resolved short of a trial.  Some cases get dismissed for legal reasons soon after the lawsuit is filed or at the Motion for Summary Judgment stage of the case.  The others reach a settlement.  When a case is settled, the insurance company really doesn’t care how the settlement money is applied.  They are going to pay a certain sum of money and how that money gets distributed, i.e., actual damages, exemplary damages, interest, court costs, or attorney fees is not really important to them.

Here is an interesting case dealing with hail damage.  This is a 2021, case from the San Antonio Court of Appeals.  It is styled, Allstate Vehicle And Property Insurance Company v. Peter Reininger.  The opinion is an appeal from a jury trial in favor of Reininger.

The opinion is lengthy and discusses several legal issues.  However, the facts of the case are pointed out here because the facts are similar to situations many other homeowners face themselves.

Reininger’s home had previously been covered by a policy issued by Liberty Mutual and that policy covered cosmetic hail damage to his metal roof.  When Reininger began looking for a new policy in 2015, he contacted Justin Losoya, an Allstate agent.  Reininger told Losoya he wanted a policy that was “apples to apples” with his Liberty Mutual policy, and Losoya stated Allstate could provide that. Reininger also asked Losoya, “If I have any bad weather, hail or any type of hail and it damaged my roof, am I covered?”  Losoya answered, “Yes, sir, Mr. Reininger, you are.  You pay a 1 percent deductible.”  Losoya did not mention any exclusions on coverage for the roof, and Reininger did not make any further inquiries about exclusions.

There are many actions or inactions an insurance can be accused of that may amount to bad faith.  One of those is discussed in a 2021 opinion from the Northern District of Texas, Sherman Division.  The opinion is styled, Deanne M. Hinson v. State Farm Lloyds.

A Magistrate Judge was assigned to hear a Motion for Summary Judgment on the case.  The Magistrate Judge ruled in favor of State Farm and Hinson appealed that ruling to the sitting Judge.  The sitting Judge affirmed the finding of the Magistrate.

This is a hail damage claim that was originally filed in State Court and then removed to Federal Court.  The Magistrate ruled in favor of State Farm on all of Hinson’s causes of action.  Hinson is appealing the decision as to one cause of action only.

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