Lessons from Hurricane Ike: Texas Revives Statutory Bad Faith

In the recent decision of USAA Texas Lloyds v. Menchaca, the Texas Supreme Court ruled that homeowners and other insureds can rely on Texas law to seek damages against insurance companies for unfair and deceptive practices in their investigations and payments or non-payments of insurance claims. In this case, a homeowner’s claim resulted from property damage caused by Hurricane Ike. Although the damage was not substantial, the Texas Supreme Court ruled that absence of substantial damages does not limit an insured from seeking recovery under the Texas Insurance Code for violations.

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