Seeing if there is liability on the insurance policy is one of the first things an insurance attorney needs to do when meeting with a prospective client.
In 1996, the Texas Supreme Court stated in Liberty Nat’l Fire Ins. Co. v. Akin, that insurance coverage claims and bad faith claims are by their nature independent. But, in most circumstances, an insured may not prevail on a bad faith claim without first showing that the insurer breached the contract.
In 1998, the Texas Supreme Court stated in Vail v. Texas Farm Bur. Mut. Ins. Co. that contractual liability is not essential to establish extracontractual liability, but it helps. For example, an insurer that owes policy benefits under the contract may also be found to have acted unfairly in refusing to pay those benefits.