What It Means: How to File an Insurance Bad Faith Claim
An insurance bad faith claim is a legal action against your own insurer for failing to handle your claim fairly. Texas Insurance Code § 541.060 lists specific unfair settlement practices, including failing to investigate a claim reasonably or refusing to settle once liability is clear. Texas Insurance Code § 542.058 goes further, requiring insurers to pay accepted claims within a set number of days or face an 18% annual interest penalty plus attorney’s fees under § 542.060.
Why this usually targets your own insurer
Texas Insurance Code § 541.060(b) specifically does not create a cause of action for a third party against someone else’s liability insurer. In practice, that means bad faith claims are strongest when directed at your own insurer, such as through an uninsured or underinsured motorist claim, not the at-fault driver’s insurance company.
What starts the clock on your claim
Tennessee’s bad faith statute, TCA § 56-7-105, requires a formal demand and a 60-day waiting period before a penalty of up to 25% applies. In Texas, a general two-year deadline under CPRC § 16.003 typically applies to related claims, so acting early matters.
TL;DR
An insurance bad faith claim arises when your own insurance company unreasonably delays, denies, or underpays a valid claim. Texas gives policyholders strong statutory protections under the Insurance Code, including an 18% penalty for late payment, while Tennessee allows a penalty of up to 25% of the claim if a refusal to pay wasn’t made in good faith. These claims are strongest against your own insurer, not the other driver’s.
An insurance bad faith claim arises when your own insurance company unreasonably delays, denies, or underpays a claim you’re entitled to under your policy. Texas Insurance Code Chapter 541 and Chapter 542 set specific deadlines and penalties for insurers, while Tennessee’s bad faith statute allows a penalty of up to 25% of the claim amount. This post covers what actually counts as bad faith and why these claims usually target your own insurer rather than the other driver’s. For a broader look at your options after a crash, see our motor vehicle accidents guide.
Common Signs of Insurance Bad Faith
Not every slow or disappointing claim response is bad faith. Insurers are allowed to investigate and to disagree over the value of a claim. What crosses the line is a pattern: repeatedly requesting the same documentation, offering a settlement far below the claim’s clear value, failing to explain a denial in writing, or simply going silent for months without a status update. A missed statutory deadline under Texas Insurance Code § 542.058, on its own, can trigger the interest penalty even without proving intentional misconduct.
Insurance company tactics to expect
Insurers sometimes frame delay as “still under review” indefinitely, without ever formally denying the claim, which can make it harder to identify exactly when bad faith began. Written correspondence and a clear timeline of your claim’s status are usually what establish the pattern.
What to Do If You Suspect Insurance Bad Faith
A few steps help protect a potential bad faith claim from the start:
- Keep a written log of every call, email, and letter with your insurer, including dates
- Request any claim denial or delay explanation in writing rather than accepting a verbal answer
- Note any missed deadlines under your policy or state law
- File a complaint with your state’s insurance regulator if the delay continues
- Contact an attorney before accepting a settlement that seems far too low
If you’re in Texas, the Texas Department of Insurance handles auto insurance complaints directly, and in Tennessee, the Tennessee Department of Commerce and Insurance offers a similar complaint process. Neither agency can force a payout, but a documented complaint often strengthens a later bad faith claim.
What This Means for Your Insurance Bad Faith Claim
An insurance bad faith claim can hold your own insurer accountable for unreasonable delay, denial, or underpayment, with real financial consequences under both Texas and Tennessee law. These claims are strongest against your own policy, not the at-fault driver’s insurer, and documentation from day one is what usually makes or breaks them. If your insurer has gone quiet or keeps asking for the same paperwork, that pattern is worth taking seriously.
This content is for informational purposes only and does not constitute legal advice. Contact Culpepper Law Group for guidance specific to your situation.
Take This Step: Get Help From a Houston or Memphis Insurance Bad Faith Lawyer
Fighting your own insurance company on top of recovering from a crash shouldn’t fall entirely on you. Culpepper Law Group offers a free consultation to review your claim, whether you’re in the Houston area or in Memphis. Our Stafford, Texas office serves the greater Houston area, and our Memphis, Tennessee office handles claims across that region. As a personal injury lawyer team working on contingency, you pay nothing unless we win. Reach out today so we can review how your insurer has handled your claim.
Frequently Asked Questions
1. Can I sue the other driver’s insurance company for bad faith?
Generally not directly — Texas law specifically excludes third-party bad faith claims against someone else’s insurer, so these claims usually target your own policy.
2. Does it cost anything to hire a lawyer for an insurance bad faith claim?
No. Culpepper Law Group works on contingency, so there’s no upfront fee and no cost unless you recover compensation.
3. Is a low settlement offer automatically bad faith?
No — insurers are allowed to disagree over value, so a low offer alone usually isn’t enough without a pattern of unreasonable delay or denial.
4. How much can I recover in a Tennessee bad faith claim?
Tennessee law allows a penalty of up to 25% of the claim amount if a refusal to pay wasn’t made in good faith, on top of the underlying claim itself.
5. What if my insurer keeps asking for the same documents I already sent?
That pattern is worth documenting closely, since repeated, unnecessary requests for the same information can support a bad faith claim.
Key Takeaways
- An insurance bad faith claim targets your own insurer for unreasonably delaying, denying, or underpaying a valid claim.
- Texas Insurance Code § 541.060 and § 542.058 set specific unfair practices and payment deadlines, with an 18% penalty for late payment under § 542.060.
- Tennessee’s TCA § 56-7-105 allows a penalty of up to 25% of the claim if a refusal to pay wasn’t made in good faith.
- Bad faith claims are strongest against your own insurer, not the at-fault driver’s, under Texas law specifically.
- A documented pattern of delay or repeated requests for the same information matters more than a single low settlement offer.
