The Texas Insurance Code allows for a private right of action for bad faith when an insurance company violates certain claims handling standards. One of these standards is a failure to conduct a reasonable investigation of a claim. This is sufficient for a policyholder to bring a cause of action for bad faith and recover the policy benefits wrongfully withheld. This has been the rule in Texas for decades. In this case, the insurance company is asking the highest court in Texas to impose a new requirement that is not in the code - an independent injury. Put another way, under this standard a policyholder must show some injury independent of the violation of the code, such as a breach of the policy itself or?, to bring a suit for damages. UP reminded the Texas Supreme Court that the code does not contain such a standard, nor is it fond anywhere in case law. Notwithstanding, such a requirement is vague, unworkable and if adopted would allow unscrupulous insurance companies to use their superior position to take advantage of their insureds and face no consequence for failing to meet its statutory obligation to act in good faith and thoroughly investigate claims.
“I don't know how we would have found answers or how to begin if they had not coached us through the process.”