Insurance Bad Faith in Texas: When Your Own Insurance Company Works Against You

You paid your premiums, filed your claim when disaster struck, and expected your insurance company to hold up its end of the deal. What you got instead was a lowball offer, an unexplained delay, or a flat-out denial. When an insurer refuses to honor a legitimate claim in Texas, it has a name: insurance bad faith.

To help injury victims make sense of this issue, we turned to Chaile Allen, the founder of The Law Firm of Chaile Allen, for her perspective. Our personal injury practice serves Abilene and the surrounding West Texas communities, and Chaile regularly works with clients who are not only recovering from an accident but also fighting their own insurance company for the coverage they were promised.

What Insurance Bad Faith Actually Is

Bad faith is a failure to honor a legally binding agreement. “When I hear a bad faith claim against an insurer, it is your own insurance company,” Chaile explains. “You filed a claim, maybe you had damage to your house or your car, and that insurance company denies the claim without reason. It is clearly covered damage that the insurance should be covering. That is bad faith.” It comes up frequently in homeowners’ claims and in auto cases where someone carries uninsured motorist coverage and their own insurer denies the claim after the at-fault party lacked sufficient coverage.

“At the end of the day, insurance is a contract. You have paid an insurance company for a service, and they promised to provide it. In the event they do not, that is bad faith,” Chaile adds. Bad faith does not always mean an outright denial, and the subtler versions are often just as damaging.

How Insurance Companies Quietly Work Against You

Chaile is direct about how adjusters approach claims. “Almost every time, the goal of the insurance company is to pay as little as possible on a claim. That is how they make money: sell a lot of policies and not pay out much. So anytime an insurance adjuster offers to settle a claim, they are trying to pay you as little as possible.” She notes bad faith kicks in when offers are not proportional to what the policy actually covers. “Much more common than outright denial is simply underpaying or delaying the claim. A lot of times, people filing insurance claims need money quickly because they have had a flood or are without a car. The longer the insurance company draws it out, the more desperate the situation the client is in, and they know that.”

The Texas Department of Insurance allows consumers to file formal complaints against insurers who engage in these practices and can investigate companies not following the law. Having an attorney involved signals clearly to the insurer that delay and underpayment tactics will not go unanswered.

The Mistakes That Can Hurt Your Claim

One of the most preventable ways a claim gets compromised is by what a client says before they know their rights. “The biggest issue I see with clients is talking to insurance companies immediately after the accident, before they have had time to gather their thoughts, or making agreements before they know what their rights are,” Chaile says. “Insurance companies record everything. A lot of times, you are still in shock after an accident. You may be hurting and not realize it yet because adrenaline can mask pain. Anytime you tell somebody you are fine, the insurance company records that and uses it against you later.” Before speaking with anyone from your insurer, review what to say to insurance adjusters after an accident. The most common mistakes clients make include:

• Giving a recorded statement: Speaking with adjusters before you have processed the situation or know your rights
• Accepting an early offer: Agreeing to a payout before knowing the full extent of your injuries or damages
• Posting on social media: Sharing anything about the accident, your physical condition, or your daily activities while the claim is open
• Tolerating excessive delays: Accepting prolonged silence from your insurer without requesting written explanations

“Our policy is simply do not post anything on social media, preferably anything at all. Things can be misconstrued,” Chaile says. “They are going to try to say you were doing things you claimed you could not do.”

What Texas Law Does to Protect You

Texas provides real legal options for policyholders facing bad faith conduct. “Insurance companies will have to pay attorney’s fees in the event it is found they are acting in bad faith,” Chaile explains. “There are other protections through the Department of Insurance and through Texas statutes that provide additional incentives for insurance companies to uphold their end of the bargain. There are a lot of ways people in Texas can protect themselves if they have the advocate and the resources to stand up to insurance companies treating them improperly.”

Knowing when conduct crosses into actual bad faith is where an attorney’s guidance is most valuable. “The alarm bells go off when you feel so far away from what the actual damages are, meaning the actual bills and expenses you are out of pocket. That is when you should start saying they are acting poorly, they are acting unfairly, and they are not giving you explanations about why they are denying your claim,” Chaile says. At that point, speaking with an attorney about your options after a denied claim is an important next step.

Your Fight Is Our Fight: The Law Firm of Chaile Allen

At our firm, we know how disorienting it is to do everything right, pay your premiums, file your claim, and still face an insurer determined to pay as little as possible. We work alongside injury victims in Abilene and across West Texas to make sure their claims are handled fairly, and any bad faith conduct meets real legal accountability. Chaile and our team bring the responsiveness and local knowledge that large, out-of-town firms simply cannot match.

If your insurance company is giving you the runaround after a covered loss, do not wait. Reach out through our contact form to schedule a consultation and find out exactly where you stand.