Bad Faith Insurance

Hail Damages Claims And Bad Faith Insurance

March 22, 2025 | Mark S. Humphreys

Claiming roof damage is not as simple as it may appear at first glance. A December 2024 opinion from the Eastern District of Texas, Tyler Division, discusses what the courts look at in roof damage claims wherein the insurance company claims the damage is pre-existing or caused for reasons other than hail damage and whether that denial is cause for a “bad faith” claim. The style of the opinion is Winterfield United Methodist Church v. Church Mutual Insurance Company.

The facts and legal history of the case can be gleamed from reading the opinion. This is a summary judgment decision.

Plaintiff argues that under Texas law, an insurer cannot investigate a claim in a manner calculated to construct a pretextual, “outcome oriented” basis to deny the claim. Plaintiff explains several ways that Defendant engaged in such conduct, including: (1) Defendant ordered its engineer to perform a second inspection even though the first inspection identified hail damage; (2) Defendant withheld the engineer report from Plaintiff for several weeks; (3) Defendant retained an engineer to “rubberstamp” its predetermined outcome without first inspecting the property himself even though its independent adjuster had already found covered damages; (4) Defendant intentionally minimized the adjuster’s findings of hail damage; (5) Defendant continued to send out its engineer to reinspect the property until the estimated damages fell below the deductible amount; and (6) Defendant withheld the underwriting file of the property from the independent adjuster and engineer.

What Can Insurance Companies Do And Not Do

March 8, 2025 | Mark S. Humphreys

The answer to the title of this article is not easy. The Texas Insurance Code is about 300 pages long as of the date of this article with another 500 pages of Index and even more for Supplements. On top of the preceding, rules and statutes governing insurance are found in other books of statutes such as the Penal Code, Family Code, Transportation Code, and others.

Chapter 1651 of the Texas Insurance Code deals with long-term care insurance policies.

Medicare supplement policies are governed in part by Chapter 1652 of the Texas Insurance Code.

Bad Faith Insurance Claims

February 1, 2025 | Mark S. Humphreys

Bad Faith Insurance claims in Texas are not as easy as many people think. This is illustrated in this 2024, opinion from the Western District of Texas, Austin Division. The opinion is styled, Franklin Square Condo Owner Ass’n v. Amguard Insurance Company. This is a summary judgment opinion.

After Franklin Square submitted a claim for the damage caused by the hailstorm, AmGuard sent an adjuster to inspect the property damage, notified Franklin Square that its inspector had assessed $13,034.90 in damages, and sent Franklin Square a check for an amount of $5,534.90 (the $13,034.90 in damages minus the deductible). Franklin Square indicated that they disagreed with the assessment of the roof damage. In response, AmGuard sent an engineer, Wyatt Hardenberg, to inspect the property on October 26, 2022, who found that 41 roof tiles exhibited hail damage, but observed that other cracked tiles lacked “a centralized focal (impact) point on the tile surface” as would indicate hail damage. Hardenburg further observed that the cracked tiles evidenced earlier damage than the hailstorm and that the roof had been treated with sealant prior to the hail damage, indicating “prior maintenance activities to arrest known water intrusions.” After Hardenburg’s assessment, AmGuard notified Franklin Square that it had readjusted its estimate and provided an additional check for $2,409.20 to replace the 41 cracked tiles and a broken window screen.

Franklin Square was dissatisfied with the amount paid and sued AmGuard for breach of contract damages, Insurance Code violations and bad faith the way the claim was handled. There were other issued in the case related to experts that will not be discussed here.

Bad Faith Claims And The Statute Of Limitations

November 9, 2024 | Mark S. Humphreys

Bad Faith claims have a statute of limitations and that limitations period must be strictly followed. This issue is discussed in a 2024 opinion from the Northern District of Texas, Fort Worth Division. The opinion is styled, Shalport, Inc. d/b/a Chevron #36316 v. Amguard Insurance Company.

Shalport, Inc. (“Plaintiff”) is the business owner of a Chevron gas station and convenience store (the “property”), which includes a car wash on its premises. Plaintiff owns commercial property insurance, which was issued by AmGUARD Insurance Company (“Defendant”). On or around December 1, 2021, the car wash on the property sustained severe damage. The damage to the carwash rendered it inoperative. Plaintiff submitted a claim for coverage to AmGUARD. AmGUARD acknowledged the claim and assigned it to a third-party administrator, Raphael & Associates. On April 20, 2022, Raphael & Associates sent Plaintiff a letter stating that no coverage existed under the policy and as such, no payment would be issued for the claim.

Plaintiff retained G.T.O. Car Wash to inspect the car wash and determine the monetary cost of restoring it to its pre-damaged condition. Plaintiff again asked AmGUARD to cover the cost of repairs pursuant to the policy.

Insurance Company Denies Claim Due To Misrepresentation

September 7, 2024 | Mark S. Humphreys

Insurance Claim Denial due to alleged misrepresentations is common in insurance disputes. It is seen most often in life insurance claims. Less common is in homeowners claims. Here is a homeowner’s claim. It is a 2024 opinion from the Western District of Texas, San Antonio Division. It opinion is styled, Sanjay Malhotra, Monesha Gupta v. State Farm Lloyds.

This opinion is the result of State Farm filing a Partial Summary Judgment Motion. The claim arose from alleged damages caused by an April 28, 2021, hailstorm. The Plaintiffs sued State Farm alleging the claim had not been properly handled.

Throughout its Motion, State Farm contends the undisputed evidence shows this case in-volves an honest dispute as to the extent of damage to Plaintiffs’ property caused by the subject hailstorm and the cost of the work necessary to rectify this damage, and therefore, the causes of action for bad faith and unfair settlement practice must fail. As support for its argument that summary judgment should be granted for Plaintiffs’ common law bad faith claims, State Farm states the following: “The inspection included both the exterior and interior of Plaintiffs’ Property. Multiple inspections were done at the property and during those inspections, State Farm noted damage to some of the roof tiles, soft metals, gazebo and interior water damage and subsequently prepared estimates for the covered damages and issued payments to Plaintiffs after application of their deductible.”

Insurance Claims & Mental Anguish

September 16, 2023 | Mark S. Humphreys

The Texas Insurance Code allows for recovery of mental anguish damages if it can be proven that the illegal conduct of the insurance code was committed knowingly. Section 541.152 speaks to the knowing conduct.

An award of mental anguish damages may be upheld when the plaintiffs have introduced direct evidence of the nature, duration, and severity of their mental anguish, thus establishing a substantial disruption in the plaintiffs’ daily routine. This evidence must come from the claimant’s own testimony, testimony of third parties, or testimony of experts, and is more likely to provide the fact finder with adequate details to assess mental anguish claims.

In the context of applying these standards to an insurance case, the 1996 Texas Supreme Court case styled, Saenz v. Fidelity & Guar. Ins. Underwriters, is a good case to review.

Bad Faith Insurance & Mis-Representations

August 5, 2023 | Mark S. Humphreys

Here is a 2023 opinion wherein the lawsuit alleges the insurer mis-handled a claim. The opinion is from the Southern District of Texas, Brownsville Division, and is styled, Maria Alcala v. Allstate Vehicle And Property Insurance Company.

Allstate filed a Rule 12(n)(6) motion seeking a partial dismissal.

First, Allstate requests dismissal of Alcala’s claim under the Texas Insurance Code for “failure to promptly provide . . . a reasonable explanation . . . for the insurer’s denial of a claim”, in violation of Texas Insurance Code, Section 541.060(a)(3). Allstate argues that the Court should dismiss this cause of action because Alcala did not allege reliance or how any allegedly unreasonable explanation contributed to her damages. As to the initial point, neither Section 541.060(a)(3) nor the caselaw on which Allstate relies indicates that a plaintiff must plead reliance as part of a Section 541.060(a)(3) claim. And other authorities recognize that a Section 541.060(a)(3) claim “does not involve reliance on material misrepresentations”. As to damages, Alcala alleges that “because Allstate’s adjuster failed to properly inspect and account for the covered losses, Defendant issued no payment to Plaintiff for the extensive damage to her property. These allegations suffice to support the cause of action at this stage of the proceedings. As a result, the Court finds both of Allstate’s arguments to dismiss this claim unavailing.

Bad Faith – Texas Insurance Code

July 31, 2023 | Mark S. Humphreys

Bad Faith or Texas Insurance Code violations are alleged is the vast majority of situations where an insurance company denies a claim. So, how do the courts look at these case. Here is a 2023 case from the Southern District of Texas, Brownsville Division. It is styled, Maria Alcala v. Allstate Vehicle and Property Insurance Company.

Plaintiff Maria Alcala filed this action in Texas state court against Defendant Allstate Vehicle and Property Insurance, alleging violations of the Texas Insurance Code and the state’s Deceptive Trade Practices Act. Alcala also alleged that Allstate breached their contract and breached the common law duty of good faith and fair dealing. Allstate removed the case to federal court, and Alcala initially filed an Amended Complaint and later a Second Amended Complaint.

Allstate filed a Rule 12(b)(6) motion to dismiss. The Court granted part of the motion and denied part of the motion.

Insurance Bad Faith Claims – Experts

July 15, 2023 | Mark S. Humphreys

Insurance lawyers have to know how to deal with experts in a case. Here is a 2023 opinion from the Eastern District of Texas, Beaumont Division, that deals with an expert. The opinion is styled, Juanita Vera v. State Auto Insurance Company and Meridian Security Insurance Company.

This is a dispute for damages alleged to have occurred from Hurricane Laura. Vera hired an expert, Gary Sanders, to testify about causation of Vera’s damages.

The admissibility of expert evidence is a procedural issue governed by Federal Rule of Evidence 702 and the U.S. Supreme Court, Daubert decision. Federal Rule of Evidence 702 sets forth the requirements that must be satisfied to enable a witness designated as an expert to testify to his or her opinions. An expert may testify in the form of an opinion if: (1) the expert’s scientific, technical, or other specialized knowledge will help the trier of fact to understand the evidence or to determine a fact in issue; (2) the testimony is based on sufficient facts or data; (3) the testimony is the product of reliable principles and methods; and (4) the expert has reliably applied the principles and methods to the facts of the case.

Claims Against Insurance Companies – Not Just Bad Faith

July 10, 2023 | Mark S. Humphreys

Insurance transactions tend to resemble one another, so disputes arising from them tend to resemble one another. There are only so many ways that an insurer and an insured can get crossways. Most cases present recurring problems that can be grouped into categories. Insurance law is even more precedent-driven than other areas, as courts try to construe similar policy language consistently. It is not surprising that cases start to look alike.

The starting point is the contract itself. The initial inquiry always begins with the language of the contract to determine what is covered and what is not. Other tort and statutory theories may logically depend on the existence of coverage, or may exist independent of coverage. The interplay between recovery for breach of contract and recovery under other theories needs to be studied. Beyond suit for breach of contract, most insurance cases can be grouped into three categories:

(1) misrepresentations