Insurance is supposed to be a safety net: in Fort Worth, it too often turns into a tug-of-war. After hail, burst pipes, or a totaled car, policyholders expect prompt payment. Instead, they meet silence, shifting explanations, or a check that doesn’t cover half the loss. That friction has a name under Texas law: insurance bad faith. This article clarifies what bad faith means, how misconduct is proven, and what remedies the law provides. It also shares practical steps that help disputes resolve fairly, before or after a lawsuit. Drawing on Texas statutes, key court decisions, and on-the-ground practices used by a Fort Worth Insurance Attorney, it highlights what firms like the Omar Ochoa Law Firm watch for in 2025.
Defining insurance bad faith under Texas law
Texas recognizes both statutory and common-law protections when insurers mishandle claims. Together, they deter unfair tactics and create real consequences when benefits are delayed or denied without a reasonable basis.
The common-law duty
Texas insurers owe policyholders a duty of good faith and fair dealing. In plain terms: once liability becomes reasonably clear, an insurer can’t unreasonably delay or deny payment. Courts have long enforced this rule to prevent carriers from leveraging their size or the complexities of a policy against an insured who is already dealing with a loss.
Key Texas statutes that matter
- Texas Insurance Code Chapter 541: Prohibits unfair or deceptive practices, such as misrepresenting policy terms, failing to promptly and fairly settle when liability is clear, or conducting an outcome-driven investigation.
- Texas Insurance Code Chapter 542 (Prompt Payment of Claims Act): Sets deadlines to acknowledge, investigate, accept/deny, and pay claims, and imposes interest and attorney’s fees when carriers miss those deadlines.
- Texas Insurance Code Chapter 542A: For property claims arising from forces of nature (hail, wind, freeze), this chapter adds pre-suit notice requirements and establishes a formula for statutory interest. It doesn’t eliminate bad-faith liability but changes the process and some remedies.
What “bad faith” is, and isn’t
Bad faith isn’t a mere disagreement over price. It is typically shown by an insurer’s unreasonable investigation, failure to consider readily available evidence that supports coverage, or reliance on exclusions that plainly don’t fit the facts. A good-faith dispute based on a reasonable interpretation of the policy may not qualify. But when the evidence makes liability clear and payment still doesn’t arrive, bad faith is in play.
Common tactics insurers use to delay or deny claims
Patterns recur across Fort Worth insurance disputes, regardless of whether the claim involves a roof, a plumbing leak, or a totaled vehicle. Recognizing them helps policyholders and their counsel frame the right response.
Delay by drip
- Serial document requests: Repeatedly asking for the same records, or demanding immaterial items, slows the clock and frustrates the insured.
- Adjuster handoffs: Rotating adjusters resets momentum and forces the claimant to “start over,” extending the investigation window.
- Endless re-inspections: Multiple site visits without a clear purpose can prolong decision-making past the Prompt Payment deadlines.
Deny by narrowing coverage
- Overbroad exclusions: Sweeping reliance on “wear and tear,” “pre-existing damage,” or anti-concurrent causation clauses, even where storm or sudden-accident evidence is substantial.
- Engineering or vendor reports with blind spots: Opinions based on limited data or assumptions, while ignoring contrary photos, moisture readings, or eyewitness statements.
- Labor depreciation and scope shaving: Reducing payouts by depreciating labor (where policy language doesn’t allow it) or cutting essential items from an estimate, like code upgrades or overhead and profit when a general contractor is reasonably necessary.
Settlement pressure
- “Take-it-or-leave-it” offers with short fuses.
- Early payments that look helpful but are anchored to a lowball scope, later used to argue the claim was handled reasonably.
These tactics don’t automatically prove bad faith. But they are warning signs, especially when paired with missed statutory deadlines, shifting justifications, or refusal to consider readily available proof.
Legal steps victims can take to prove misconduct
Proving bad faith is about evidence, timing, and a clean paper trail. Fort Worth practitioners focus on building a record that shows what the insurer knew, when it knew it, and how it acted.
Build the factual record early
- Preserve the scene: Photos, video, moisture maps, and invoices taken close in time to the loss carry weight.
- Independent estimates: Contractor or public adjuster estimates, plus specialized expert input (engineers, plumbers, auto appraisers) when the loss calls for it.
- Timeline tracking: Log dates for notice of claim, inspections, document requests, and every substantive insurer communication. This is essential for Prompt Payment claims under Chapter 542.
Leverage Texas notice rules
- Pre-suit notice: For most Chapter 541 and Deceptive Trade Practices Act claims, and for weather-related property claims under Chapter 542A, Texas law requires a 60-day notice letter before filing suit. A precise demand that details facts, damages, and fees promotes resolution and safeguards fee recovery.
- Appraisal considerations: Property policies often include appraisal to resolve pricing disputes. Appraisal can speed payment, but counsel weigh timing and scope carefully because it can affect certain damages without eliminating Prompt Payment exposure.
Pin down the investigation
- Ask for the basis of decisions: Clear, written explanations expose misapplications of policy terms or selective use of evidence.
- Compare internal and external reports: When an engineering report contradicts site data or prior insurer statements, that gap can be powerful at trial.
- Preserve communications: Recorded calls, emails, and text messages can show whether the insurer meaningfully engaged with facts that favored coverage.
File the right claims
- Breach of contract: For unpaid benefits owed under the policy.
- Chapter 542 (Prompt Payment): For missed deadlines and late payment: interest accrues even if the carrier eventually pays after appraisal, as Texas courts have clarified.
- Chapter 541 and common-law bad faith: For unfair practices and unreasonable claim handling. After the Texas Supreme Court’s guidance, extra-contractual damages typically require proof of an injury independent of policy benefits, though statutory remedies and fee shifting remain potent.
A Fort Worth insurance attorney builds cases around these pillars, often resolving disputes pre-suit when the notice letter and supporting evidence make the risk of litigation clear.
Remedies available in bad faith insurance lawsuits
Texas remedies aim to make policyholders whole and deter unfair practices. The mix depends on the claim type and facts.
Contract and statutory remedies
- Policy benefits: The unpaid amount that should have been paid under the contract.
- Prompt Payment interest and fees: Under Chapter 542, missing investigation, decision, or payment deadlines triggers statutory interest and reasonable attorney’s fees. For certain weather-related property claims governed by Chapter 542A, the statute sets a specific interest formula and still allows fee recovery when notice obligations are met.
Extra-contractual damages
- Chapter 541 and DTPA: Economic damages for unfair practices: if the carrier knowingly engaged in the conduct, those damages can be multiplied up to three times the economic component.
- Common-law bad faith: In egregious cases, mental anguish and exemplary damages may be available, subject to Texas proof standards and caps.
Appraisal’s effect
Appraisal can resolve the amount of loss, but it doesn’t automatically wipe out Prompt Payment exposure for delay. Texas Supreme Court decisions have confirmed that paying after appraisal won’t insulate an insurer from statutory interest if deadlines were missed. But, depending on timing and facts, appraisal awards may limit breach-of-contract damages to the award amount, shifting the focus to statutory remedies and fees.
Practical outcomes
Most disputes end in negotiated settlements that combine policy benefits, interest, and fees. Clear notice letters and well-documented files tend to increase offers. When litigation proceeds, courts in Tarrant County closely examine the reasonableness of the investigation, adherence to statutory timelines, and whether the insurer’s reading of the policy was fair in context.
