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The Claim Attorney
The Claim Attorney
Law Office of Michael P. Bowman

Warning Signs of Insurance Bad Faith in Texas

What to Watch For in a Texas Property Claim

Most claims that go wrong do not start with a dramatic denial. They start with silence, a short inspection, a thin estimate, and a reason that keeps changing. I spent years on the carrier side of property claims as a former Florida-licensed adjuster before I represented policyholders, and the patterns are not subtle once you know what to look for. Here is what I watch for, and what I ask clients to write down.

What Texas Law Requires of Your Insurer

Chapter 542, Subchapter B of the Texas Insurance Code — the prompt-payment statute — puts these deadlines on a first-party claim:

  • Within 15 days after notice of the claim, acknowledge it, begin the investigation, and request the items it reasonably believes it needs (§ 542.055).
  • Within 15 business days after receiving all requested items, accept or reject the claim in writing — or explain in writing why more time is needed and decide within 45 days of that notice (§ 542.056).
  • Within 5 business days after notifying you it will pay, pay the claim (§ 542.057).
  • Where no other period applies, delay beyond 60 days after receiving all items triggers statutory damages (§ 542.058).
  • These periods are extended by 15 days when the commissioner declares a weather-related catastrophe or major natural disaster (§ 542.059(b)).
  • Late payment carries 18% annual interest plus reasonable attorney’s fees (§ 542.060(a)). For claims governed by Chapter 542A, the rate is the judgment rate under Finance Code § 304.003 plus five percent (§ 542.060(c)).

Warning Signs to Watch For

  • Delay. Deadlines pass with no acknowledgment, no written decision, and no payment.
  • Document churn. You are asked again and again for records you already sent.
  • No real inspection. Nobody from the insurer ever looks at the property, or the visit lasts fifteen minutes and never reaches the roof, the attic, or the affected rooms.
  • Shifting reasons. The denial is wear and tear, then it is the deductible, then it is late notice, then it is a cosmetic-damage endorsement.
  • Ignored evidence. Your contractor’s line-item estimate, photographs, or moisture readings get no response at all.
  • Scope that leaves out the obvious. The insurer’s estimate skips tear-off, disposal, waste, code-required upgrades, or matching.
  • Misquoted policy. An exclusion is described to you, but nobody will identify the language or send the full policy with endorsements.
  • Undisputed money withheld. Amounts nobody disputes are held back while the rest is “under review.”
  • Release pressure. You are asked to sign a release or accept a “full and final” payment before the scope is settled.
  • A report that does not match the visit. The engineer’s conclusions cover areas you never saw anyone examine.
  • Vendor steering. You are told payment depends on using the insurer’s preferred contractor.

Unfair is not the same as bad faith. A slow, wrong, or frustrating claim decision is not automatically bad faith. Texas recognizes a common-law duty of good faith and fair dealing and statutory unfair-settlement-practice claims under Chapter 541 of the Insurance Code, but a genuine dispute about the cause of a loss or the cost to repair it is not, by itself, a violation. Whether conduct crosses the line depends on the policy language, the claim file, and the facts of your case. Anyone who tells you otherwise before reading the file is guessing.

What to Document Right Now

  • A single dated log of every call and letter: who, when, what was said, what was promised.
  • The key dates: notice, acknowledgment, inspection, each document request, each payment.
  • Written requests — and any refusals — for the complete policy, the insurer’s estimate, and any engineer or consultant report.
  • Your own photographs of the inspection itself: who came, how long they stayed, what they did and did not look at.
  • Every estimate, invoice, and report from your side, with measurements.

Deadlines That Can End the Claim

  • Suit on the policy: four years by default (Tex. Civ. Prac. & Rem. Code § 16.051); a policy may shorten it to no less than two years (§ 16.070).
  • Common-law bad faith: two years (§ 16.003(a); Murray v. San Jacinto Agency, Inc., 800 S.W.2d 826 (Tex. 1990)).
  • Insurance Code Chapter 541: two years (§ 541.162(a)). DTPA: two years (Tex. Bus. & Com. Code § 17.565).
  • Chapter 542A written presuit notice: at least 61 days before filing (Tex. Ins. Code § 542A.003).
  • TWIA claims: file within one year of the damage (Tex. Ins. Code § 2210.573(a)).

When to Call Me

Call when a deadline has passed with no written decision, when the reason for the denial keeps changing, when the insurer’s scope and your contractor’s scope are far apart, or when you are handed a release. Bring the policy, the claim correspondence, the estimates, and your log. I will tell you what I see.

Your initial case review is free. Call (850) 572-8784 or email info@claimattorney.com.

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This guide is general information for Texas and Alabama residents, not legal advice, and reading it does not create an attorney-client relationship. Deadlines and policy terms vary, and results depend on the facts of each case. Michael P. Bowman is licensed to practice law in Texas and Alabama only. Responsible attorney: Michael P. Bowman, Law Office of Michael P. Bowman PLLC, Austin, Texas. Questions? Call (850) 572-8784 or visit www.claimattorney.com.