Property owners buy insurance to protect their hard-earned investment. Yet after a fire, storm or major loss, some insurance companies delay, deny or underpay claims. These tactics can leave commercial and multi-family property owners feeling abandoned at the worst possible time. In Texas, the law offers protection against unfair insurance conduct when an insurer fails to handle a claim in good faith.
Understanding bad faith insurance practices
Bad faith often shows up through patterns, not one single mistake. Texas law sets clear standards for how insurers must investigate, evaluate and pay claims. The Texas Insurance Code, including Chapter 541.060 outlines unfair settlement practices while Chapter 542.056 (Prompt Payment of Claims Act) provides 15 business days for the decision which may be extended to 30 days if the insurer declares a catastrophe or weather-related event.
These statutes require insurance companies to act promptly and honestly. Legal remedies may apply if they fail to do so. Here are some red flags that policyholders need to watch out for:
- Long delays with no clear explanation
- Repeated requests for the same documents, trapping property owners in a loop
- Unreasonable claim denials with insufficient evidence
- Settlement offers far below repair costs
Once these signs are present, the property owner should start documenting proof of bad faith practices. These written records will show how the insurer handled the claim over time.
What can property owners do to fight these tactics?
Property owners need to start collecting copies of the policy, photos of damage and all communication with the insurer. Clear timelines help show whether delays or shifting explanations occurred. Independent repair estimates may also highlight when an insurer lowballed a claim. At this stage, many owners would rather focus on repairs, so it is helpful to work with an insurance attorney who can handle the process from start to finish.
How the law levels the field
Texas law allows policyholders to pursue damages if the insurer knowingly caused financial harm. Policyholders may recover up to three times the actual damages, with the post-judgment interest rate for December 2025 set at 7%. The penalty for weather-related claims under Texas Insurance Code §542A.007 is 5% plus the judgment rate.
Property owners across Texas may feel frustrated about bad faith practices, but having a lawyer to advocate for their rights can turn that frustration into informed action.