Wright Commercial Litigation represents policyholders—including businesses, nonprofits, homeowners, commercial property owners, executives, and others—in the Dallas-Fort Worth area and throughout Texas with insurance coverage disputes and bad faith claims, often on a contingency basis.
Insurance is a form of risk management allowing an individual or business to hedge against outsized loss by paying a premium that gets pooled with others to spread the expenses across a larger group. Those who suffer a covered loss are paid out of the aggregated premiums with the remainder spent on administration costs and otherwise kept as profit. That places significant power in the hands of the aggregating entity—an insurance company—while also creating an incentive to deny or minimize payouts. As a counterbalance, Texas law obligates insurance providers and adjusters to act in the utmost good faith and treat their insureds fairly, or else face the prospect of multiplied damages.
When an insurance company denies coverage, undervalues a loss, or fails to defend and indemnify a third-party claim, it takes a skilled professional to identify and redress all the breaches that may have occurred in the process. Insurance professionals are repeat players with large staffs of adjusters and attorneys looking for ways to avoid payment if possible. In that quest, they sometimes disregard the facts or interpret a policy in strained ways to avoid coverage.
Wright Commercial Litigation helps policyholders level that playing field with the substantial skill and experience of an insurance attorney working hard to ensure every covered loss is fully compensated and that an insurance company or adjuster who acts in bad faith is held fully to account for its improper conduct. Contact the firm today for a free evaluation of your insurance coverage dispute and see if the firm can take your case on a contingency basis.
Representing Dallas-Fort Worth Clients in Insurance Coverage Disputes of Bad Faith
Virtually any risk can be covered by insurance … for the right price. Determining that is the job of an insurance company’s underwriters subject to the limitations of law, with a policyholder entitled to expect all claims that are covered will be honored and promptly paid, especially since those suffering a loss typically cannot afford the delay.
Wright Commercial Litigation assists business and individual clients with many different types of insurance disputes, often on a contingency basis, including:
- Commercial property losses
- Commercial general liability (CGL) policies
- Homeowner, residential, and dwelling policies
- Professional liability (or errors and omissions (E&O) and malpractice) policies
- Director and officer (D&O) liability
- Life insurance and accidental death and dismemberment (AD&D)
- Oil and gas insurance policies
- Farm and ranch insurance policies
- Duty to defend and indemnification disputes
While the nature of an insurance dispute can vary substantially depending on the policy and type of loss, the principles applicable to claim adjudication—or “adjusting” a claim (defined as “to bring to a more satisfactory state” or “settle”)—remain the same no matter the language used in the insurance contract or whether a policyholder is an individual, a small business, or even a large corporate enterprise. All policyholders must be treated fairly and in good faith.
Unfortunately, some insurance companies look for ways to deny claims involving individuals and small businesses in particular, due perhaps to the greater imbalance of information and lack of resources available to such policyholders, using any number of otherwise legitimate reasons to deny claims in improper ways, such as by declaring:
- The damage was not caused by a covered event
- The policy language carves out an exclusion for the cause of loss
- The claim was not filed within the required period of time
- The damage is less than the policy’s deductible
- The property loss is exaggerated or less than claimed
Insurance contracts are complicated documents with numerous exclusions and even further exceptions to those, with convoluted payout calculations (such as actual cash value (ACV), depreciation, and replacement costs resulting in variable contingent amounts) and other conditional loss payment requirements. If an insurance company has denied your business, commercial, or homeowners insurance claim for reasons you suspect are invalid or that simply do not make sense to you, then contact Wright Commercial Litigation for a free evaluation and to explore your options.
Common Types of Insurance Coverage Disputes and Claims
Wright Commercial Litigation assists with many varieties of insurance coverage disputes that regularly occur, often on a contingency basis, including:
Businesses and individual homeowners (or their mortgage companies) recognize the importance of having insurance to protect valuable property, structures, contents, and inventory. No matter whether a policy is commercial or residential, there can be claims for loss related to:
- Construction defect
- Freezing weather and burst pipes
- Natural disasters like a fire, tornado, hurricane, or flood
- Negligent, intentional, or accidental conduct of others
- Professional liability and errors in making a repair or improvement
- Storm damages from high wind, lightning, rain, or hail
- Theft or vandalism
- Water damage due to the failure of an appliance, device, or mechanical/plumbing system
These are generally known as “first-party” insurance claims because they involve harm suffered directly by the policyholder. It is important to get a qualified attorney or public adjuster involved early on if you suspect your insurance company may be trying to deny or underpay a valid property damage claim, as that may require securing professionals to conduct inspections and properly document the loss and calculate damages.
Business interruption insurance—also known as loss of business income or business continuation coverage—is a type of insurance that helps a company get back on its feet and replace income lost due to covered events or destruction of assets. It is important to read a policy closely to know what types of events trigger coverage. Some are limited to direct physical harm and wide-scale tangible disasters while others also cover intangible events like communicable diseases (such as the COVID-19 pandemic, a subject of many lawsuits recently). It is important to have an experienced commercial litigator involved in these types of insurance disputes because the damages may include forecasting and calculating revenue in a way similar to lost profits in a business dispute, ancillary expenses (like mortgages, loan payments, payroll), and the costs of relocating or starting up operations again elsewhere.
Third-Party Liability and the Duty to Defend or Indemnify
Many types of insurance policies also cover the other main category of insurance coverage disputes: those involving “third-party” claims. In general, that means insurance coverage for the risk of suit or claims made by a customer, guest, or other third party to your operation. For example, small and midsized businesses who deal with the public typically carry commercial general liability (CGL) insurance to protect against claims arising from premises liability, or business activities like false advertising, data breach, product liability, and more. Those in a field requiring professional skill or judgment—such as contractors, engineers, doctors, attorneys, and others—carry errors and omissions (E&O) or “malpractice” coverage. Companies that raise capital from private equity or other investors and shareholders typically carry directors and officers (D&O) coverage to protect against claims of mismanagement by the executives. Lastly, even individual homeowner policies provide a type of third-party coverage for injury to guests.
Third-party liability coverage is meant to pay for the costs associated with a legal defense, which may include attorneys’ fees, experts, court fees, judgments, and settlements. In the event of a claim, demand, or suit by a third party, it is thus very important to notify your insurance carrier immediately to ensure your rights to coverage and a defense are not inadvertently impaired. Unfortunately, some carriers look for ways to avoid their duty to defend you or your business (often doing so only under a “reservation of rights” as to coverage) and then, if there is a loss, ultimately fail to indemnify (or pay) that settlement or judgment to the fullest extent required by a policy. Failure to do so or act prudently in the process—such as not agreeing to settle a claim within limits if reasonable—can give rise to extracontractual liability for the insurance company, including a Stowers claim that makes the insurance carrier liable for amounts even far beyond the limits of your policy.
A failure to comply with the terms of an insurance policy is a breach of contract. Unlike other contracts in Texas, however, insurance companies have an implied legal duty to act in the utmost good faith towards their policyholder. Both the common law and statutes enacted by the Texas Legislature penalize the bad faith conduct of an insurance company or adjusters, which may include:
- Failing to timely acknowledge and decide a claim
- Failing to thoroughly investigate the circumstances in making such a decision
- Using a substandard investigation as a pretext to deny or underpay a claim
- Relying on information known to be incomplete, incorrect, or the result of bias
- Attempting to settle a claim for less than its full value or as leverage to pay less on other claims
- Delaying, discounting, or denying a claim without a valid reason or explanation
- Misrepresenting the terms of the insurance policy
- Withholding relevant information from a policyholder
- Applying unreasonable interpretations of the policy language to deny or limit a claim
Bad faith is punished by Texas law with the ability to recover an award of multiplied damages, which can increase the recovery of a policyholder by up to three times its actual loss otherwise under both the Insurance Code and Deceptive Trade Practices Act (DTPA). Obtaining such a recovery requires special attention to policy conditions and statutory requirements before bringing suit, as well as skill in litigation to uncover the more subtle forms of bad faith that may be evidenced only within the insurance company’s own files and history of dealing with similar claims.
Prompt Pay Act
Insurance companies also have a further statutory obligation not only to make proper coverage decisions but promptly pay for losses. Some insurers and adjusters illegitimately attempt to extend claims long as possible in the hopes it will cause an uninformed policyholder to accept less than that to which they are entitled or potentially lose rights by waiting too long in the process, and otherwise systematically underpay claims in the first instance knowing that a small business or individual is less likely to have the time and resources to counteract such misconduct. Texas law accordingly provides for the recovery of attorney’s fees in remedying a failure to promptly decide and pay a valid insurance claim, along with statutory interest at the rate of 18% (or 10% for certain weather-related claims), which provides a disincentive towards sharp dealing and additional recovery. Most recently, the Texas Supreme Court has confirmed the requirements of the Prompt Pay Act apply even when an insurance company attempts to use an appraisal clause or process in unfair ways to delay paying amounts that were legitimately due from the beginning.
Why You Need Wright Commercial Litigation for Your Insurance or Bad Faith Claim in Dallas-Fort Worth
No matter the type of insurance coverage dispute, the result often may turn entirely on the details of just a few words in a very long and complex policy document, or the nuanced aspects of whether an insurance company fully complied with its duty to act in good faith towards a policyholder. Wright Commercial Litigation’s principal attorney—Jason E. Wright—has substantial knowledge of all types of coverage disputes and can help you obtain every penny you are entitled to receive up front (and sometimes more if an insurance company acted poorly enough).
If you are facing unwarranted delay, denial, or underpayment of an insurance claim made by you as an individual or homeowner, or involving your business, contact the firm today for a free confidential evaluation. Often the firm can offer to take your case on a contingency basis to help you level the playing field and resolve insurance disputes by appraisal, negotiation, mediation, settlement, or litigation if that becomes necessary.
Contact the firm today to set up your appointment.