Can You Sue an Insurance Company for Taking Too Long?

When you file an insurance claim, you expect your insurance company to process it quickly and fairly. The entire market for insurance policies is built upon the promise of getting the help you need when it matters most. Unfortunately, this isn’t always how it works. 

Policyholders often find themselves waiting for their claim to be processed while their insurance companies drag their feet, delay payments, or endlessly "investigate" legitimate claims. Meanwhile, you’re dealing with your injuries, significant stress, and mounting medical bills. So what do you do? Can you sue an insurance company for taking too long?

Yes. The good news is that insurance companies are legally obligated to handle claims within reasonable timeframes, and when they fail to do so, you may have grounds to sue them. Keep reading to find out if you may have a case, or call the Houston personal injury lawyers at Calderon Law Firm today at (346) 999-5673 to fight for what you deserve. 

How long does an insurance company have to investigate a claim in Texas?

What is the longest an insurance claim can take? The timeline for insurance claims can vary significantly based on your insurance policy and the details of your claim, but there are some general guidelines.

Texas has specific regulations governing how insurance companies must handle claims, as outlined in the Texas Insurance Code and the Texas Prompt Payment of Claims Act contained therein. These regulations establish strict timeframes that insurers must follow.

• Within 15 days of receiving your claim (or within 30 days for some insurers), the insurance company must acknowledge receipt, begin an investigation, and request any necessary information or documentation.
• Once the insurer receives all requested information, they have 15 business days to accept or reject the claim.
• If the claim is accepted, the insurer must pay within 5 business days.
• If the insurer needs more time to investigate, they can extend the investigation period by notifying you in writing, but generally, this extension cannot exceed 45 days from the date they received all requested documentation.

While complex claims may justifiably take longer to resolve, if your claim has been pending for months without substantive updates or clear explanations for the delay, it may constitute an unreasonable delay. 

If a Texas insurer fails to comply with these timeframes without a valid reason, they may be subject to penalties, including interest on the claim amount and attorney's fees if legal action becomes necessary. Additionally, if an insurer's delay is found to be in bad faith, they may be liable for additional damages beyond the claim amount.

What are the real reasons insurance can deny a claim?

While delays are frustrating, it's important to distinguish between legitimate reasons for claim denials and bad faith practices. Insurance companies have valid grounds to deny claims in certain circumstances, some of which include:

1. Policy exclusions. All insurance policies contain specific exclusions — events or circumstances that are explicitly not covered. 
2. Coverage limitations. Your policy may have specific caps on certain types of claims or coverage limitations that restrict the amount payable for specific losses.
3. Policy lapse. If you failed to pay premiums and your policy lapsed before the accident occurred, the insurer may have legitimate grounds to deny coverage.
4. Material misrepresentation. If you provided incorrect information when applying for insurance that would have affected the insurer's decision to issue the policy or the premium they charged, they may have grounds to rescind the policy or deny claims.
5. Late reporting. Most policies require quick notification of claims. Significant delays in reporting can provide grounds for denial if the delay prejudiced the insurer's ability to investigate.
6. Lack of documentation. If you cannot provide sufficient evidence to substantiate your claim or the value of your losses, an insurer may legitimately deny or reduce the claim payment.

While these are legitimate reasons for denial, insurers must clearly communicate the specific basis for the denial, citing the relevant policy provisions and explaining their reasoning. A denial without proper explanation or based on unreasonable interpretations of policy language may constitute bad faith practices.

Even if you know your claim is being wrongly denied, without a skilled attorney who sues insurance companies by your side, it will be next to impossible to do anything about it. 

What to do if insurance company is stalling

If you believe your insurance company is deliberately delaying your claim without legitimate reason, there are a number of steps you can take before contacting an attorney.

1. Document everything. Keep detailed records of all communications with your insurance company, including dates, names of representatives, summaries of conversations, and copies of all documents submitted. This documentation will be crucial if you need to escalate the matter.
2. Submit a formal written complaint. Send a formal written complaint to your insurance company, detailing the timeline of your claim process and specifically highlighting the delays. Request a written response explaining the status of your claim and a specific timeline for resolution.
3. Escalate within the company. Ask to speak with a supervisor or claims manager. Sometimes, issues can be resolved by speaking with higher-level employees who have more authority to expedite claims.
4. Consult with an insurance attorney. An experienced insurance attorney can evaluate your case, advise you on the strength of your claim, and help determine if the delays constitute bad faith. They can also handle communications with the insurer, which often accelerates the process.

Insurance companies count on the fact that their large resource pools will scare off most policyholders. By hiring a personal injury lawyer who can rival their teams of attorneys and can persistently and professionally advocate for your rights, you give yourself a fighting chance. 

Can I sue my insurance company for emotional distress?

It depends on the circumstances of your claim and your injuries, but you may be able to sue the insurance company for non-economic damages. If you were involved in a traumatic and serious accident — say you were hit by a truck or are experiencing chest pain after a car accident — and have yet to receive the money to aid your recovery, that delay can have a massive negative effect on your circumstances. 

Under Texas law, emotional distress damages may be recoverable in insurance bad faith cases when:

• The insurance company's conduct was extreme
• The conduct caused you severe emotional distress
• The emotional distress is not merely from the denial or delay of the claim itself, but from the manner in which the company handled the claim

It's worth noting that while Texas law does recognize emotional distress claims in insurance contexts, courts are likely to be cautious about awarding emotional distress damages without substantial evidence. 

Is it worth suing an insurance company?

While suing your insurance company can be a powerful tool to hold them accountable — and may be the only way you can get the compensation you deserve — it also involves a significant investment of time, energy, and resources.

For smaller claims (generally under $10,000), alternatives like small claims court or the Texas Department of Insurance complaint process might help you get what you need faster. While for more substantial claims involving significant delays or clear bad faith practices, litigation may not only be financially worthwhile, but also necessary to get what you need.

If you or a loved one has been delayed or denied by an insurer after an accident, the best thing you can do to protect yourselves is to contact an experienced injury lawyer immediately. A good lawyer can provide a realistic assessment of your specific case and help you weigh these factors to make an informed decision.

When can you file a bad faith lawsuit?

“Bad faith” refers to an insurance company's unreasonable conduct in handling your claim. Not every denied claim or delay constitutes bad faith, but certain patterns of behavior may violate Texas law and leave you the opportunity to file a bad faith lawsuit.

Under Texas law, you may have grounds for a bad faith lawsuit when an insurance company:

1. Violates the Prompt Payment of Claims Act. As detailed earlier, insurance companies must adhere to specific timeframes for acknowledging, investigating, deciding on, and paying claims. Violations of these timeframes can form the basis of a statutory bad faith claim.
2. Breaches the duty of good faith and fair dealing. Texas recognizes that insurers have a common law duty to act in good faith. This duty is breached when an insurer denies or delays a claim without a reasonable basis or when the insurer fails to conduct a reasonable investigation.
3. Engages in unfair or deceptive practices. The Texas Insurance Code prohibits unfair practices like misrepresenting policy provisions, failing to provide reasonable explanations for denial, not attempting in good faith to effectuate a fair settlement, or offering substantially less than the amount ultimately recovered.
4. Violates the Texas Deceptive Trade Practices Act (DTPA). Insurance violations can sometimes also violate consumer protection laws, particularly when they involve misrepresentations or deceptive practices.

The threshold for proving bad faith is higher than simply showing that the insurance company was wrong about your claim. You must demonstrate that the insurer knew or should have known that there was no reasonable basis for denying or delaying your claim. This high standard of proof often requires evidence of the insurer's state of mind or internal practices, which is why having an experienced attorney is particularly important when dealing with insurance companies.

Is the insurance company taking too long? Call Calderon and start fighting. 

When insurance companies drag their feet on your claim, the financial and emotional impact can be devastating. Medical bills pile up, lost wages begin to compound, and the stress of uncertainty takes a toll on your well-being. So, can you sue an insurance company for taking too long? Yes, but you’ll need a good attorney to do it. 

Whether you’re looking for a Houston car wreck lawyer or a Houston work injury attorney to represent you against the insurance companies, Calderon has your back. We understand the tactics insurance companies use to delay and deny legitimate claims. We have the knowledge and experience required to go up against the large teams of attorneys in front of you. 

Don't let the insurance company's delay tactics defeat you. Texas law provides strong protections for policyholders, but these rights must be actively enforced. The longer you wait to take action, the more challenging your situation may become.

Call Jose Calderon of Calderon Law Firm today at (346) 999-5673 or contact us online for a free, confidential consultation.