Commercial general liability insurance is fundamental to the continued operation of most businesses in the state of Texas, as it protects policyholder-businesses from being exposed to damages liability that is in excess of their ability to pay. In other words, general liability insurance is important for avoiding financial insolvency.
Unfortunately, insurers frequently deny coverage, undervalue legitimate insurance claims, delay the payout or processing of the claim, and may even refuse to step in and defend the policyholder in the event of litigation. In some cases, the insurer may fail to reach a reasonable settlement with the injured party, thus exposing the policyholder to unnecessary liability that is beyond their coverage limits.
Policyholders are not left without options, however. Texas law entitles general liability insurance policyholders to sue and recover damages when their claims have been wrongfully denied, or when the insurer has otherwise failed to adhere to their contractual duties.
A Look at General Liability and Bad Faith
In Texas, insurers have a duty to act in good faith with regard to policyholders. Failure to do so will give rise to bad faith liability. General liability insurers may be responsible for damages arising from bad faith conduct if the policyholder can prove that the insurer:
- Failed to defend the policyholder in litigation brought against them on the basis of covered claims.
- Failed to properly investigate claims brought against the policyholder.
- Failed to reach a settlement in a timely manner where liability was reasonably clear.
- Failed to make reasonable attempts to negotiate a settlement, thus leading to liability in excess of coverage limits.
- Wrongfully denied the policyholder’s legitimate insurance claims.
- Undervalued the claims without proper justification.
- Unreasonably delayed the processing or payout of the insurance claims at-issue.
- Misrepresented the general liability insurance contract at the time of its execution.
- And more.
Exclusionary Clause Interpretation
Exclusionary clauses in Texas must be interpreted in a manner that is favorable to the policyholder — not the insurer. Insurers in the general liability context often use ambiguous exclusionary clauses to avoid having claims qualify for payout. Policyholders, however, have an advantage in Texas, and may force a more favorable interpretation of ambiguous exclusionary clause language.
General liability insurance is critical to the healthy operation of most businesses, as it protects businesses from a wide range of potential claims. Given the nature of general liability insurance, however, the decision of the insurer (to deny, delay, or defend the policyholder in a lawsuit) can have a substantial effect on the financial solvency of the policyholder-business.
At Berg Plummer Johnson & Raval, LLP, our attorneys have experience representing a range of policyholders in disputes arising under comprehensive general liability insurance. Our attorneys are granted a unique perspective and are capable of effectively countering the strategies typically employed by opposing counsel. Our results reflect the success of this approach.
Our attorneys are committed to providing legal representation that is client-oriented to the core. We recognize that clients have their own objectives, preferences, and budget limitations, and to the degree possible, we offer customized fee arrangements to our clients that are well-suited to their particular needs. Call us at (713) 526-0200 or contact us online to schedule a consultation.