Legally Reviewed by Kevin Henrichson on November 6, 2026
When you are hurt in an accident, the insurance claim is supposed to help you recover. Too often in Austin and across Texas, it becomes another fight: a claim that sits for months, a denial with no real explanation, or an offer that does not come close to your medical bills. Insurance companies are allowed to investigate and question a claim. They are not allowed to handle it unfairly or dishonestly, and when they cross that line, Texas law gives you a way to hold them accountable.
Byrd Davis Alden & Henrichson, LLP is Austin’s oldest personal injury law firm and has represented injured Texans since 1959. Our Austin personal injury lawyers handle bad faith insurance claims that arise from injury cases, such as a crash with an uninsured driver or a catastrophic injury where the insurer refuses a fair settlement. If your claim involves serious physical harm and an insurer that will not play fair, we can help you understand your options.
⚠ Time-Sensitive · Texas Law Limits Your Window to Act
Most Texas bad faith insurance claims must be filed within two years.
The clock can start when the unfair conduct happens, not when you finally give up on the adjuster. Our trial lawyers bring more than 65 years of Austin injury experience, and you pay no fee unless we win.
What Bad Faith Insurance Means Under Texas Law
Every insurer in Texas has a legal duty to handle claims fairly and honestly. Chapter 541 of the Texas Insurance Code lists unfair claim settlement practices that can expose an insurance company to liability. Common warning signs in an injury claim include:
Misrepresenting Your Coverage
Telling you a loss is not covered, or describing policy terms in a misleading way, to avoid paying.
Stalling a Clear Claim
Failing to make a prompt, fair settlement effort once liability has become reasonably clear.
No Real Investigation
Refusing to pay without conducting a reasonable investigation of your injuries and losses.
No Explanation for a Denial
Failing to promptly explain, with reference to the policy and facts, why a claim was denied or a low offer was made.
Silence on Coverage
Not confirming or denying coverage within a reasonable time after receiving your proof of loss.
Leverage Tactics
Holding back payment on one part of a claim to pressure you into settling another part.
A denial or a low offer is not automatically bad faith. Insurers may dispute a claim when they have a reasonable basis to do so. The question is whether the company acted unreasonably or dishonestly, and that usually comes down to what is in the claim file, the adjuster’s notes, and the timeline of how your claim was handled.
How Bad Faith Shows Up in Austin Injury Claims
In an injury case, the insurer you are dealing with changes your rights. Your own insurance company owes you duties under your policy. The at-fault driver’s insurer owes its duties to its own policyholder, not to you, which limits a direct bad faith claim but opens a different kind of leverage.
| Your Own Insurer (First-Party) | The At-Fault Driver’s Insurer (Third-Party) | |
| Coverage involved | Uninsured/underinsured motorist (UM/UIM), personal injury protection (PIP), medical payments | The at-fault driver’s liability coverage |
| Who the insurer owes duties to | You, as the policyholder | Its own insured, the at-fault driver |
| Direct bad faith claim | Often available under Chapter 541 and the Texas Prompt Payment of Claims Act | Texas law generally does not allow one |
| Main leverage | Statutory damages, interest, and attorney’s fees | A Stowers settlement demand within policy limits |
After a car accident in Austin with an uninsured or underinsured driver, your own UM/UIM coverage may be what pays your claim. That carrier is your insurer, yet it will often dispute who was at fault or what your injuries are worth before it pays anything. The same pattern appears in truck accident claims and other serious crashes where the amounts at stake are large.
The Stowers Doctrine and Settlement Offers Within Policy Limits
When an at-fault driver’s insurer receives a reasonable settlement demand within its policy limits and unreasonably turns it down, Texas law may make that insurer responsible for a later judgment above those limits. Known as the Stowers doctrine, this rule gives injured people real leverage in cases involving catastrophic injuries and wrongful death, where damages can exceed the available coverage. A Stowers demand has strict requirements, so it should be prepared by an attorney who knows how insurers respond to them.
What You May Recover in a Texas Bad Faith Insurance Claim
Texas gives policyholders meaningful remedies when an insurer violates Chapter 541. These remedies sit alongside your underlying injury claim for medical expenses, lost income, and pain and suffering.
Actual Damages
The losses caused by the insurer’s unfair conduct.
Fees and Costs
Court costs and reasonable and necessary attorney’s fees.
Up to Three Times Damages
Available if a jury finds the insurer acted knowingly.
On first-party claims, the Texas Prompt Payment of Claims Act may also add statutory interest and fees when an insurer misses required deadlines for acknowledging, deciding, or paying a valid claim. What applies in your case depends on your policy, the type of coverage, and how the insurer handled the claim.
Statute of Limitations for Texas Bad Faith Insurance Claims
Under Texas Insurance Code Section 541.162, a bad faith lawsuit generally must be filed within two years of the date the unfair act occurred, or the date you discovered it or reasonably should have discovered it. Your underlying personal injury claim has its own two-year deadline, which usually runs from the date of the injury. A wrongful death claim generally must be filed within two years of the date of death.
Before filing a Chapter 541 lawsuit, Texas law generally requires at least 61 days of written notice to the insurer describing your complaint and your damages, so the practical deadline arrives sooner than it appears. Some policies also contain their own contractual deadlines. Missing a deadline can end your claim permanently, so do not hesitate to speak with an attorney as soon as you suspect your claim is being handled unfairly.
How Our Austin Bad Faith Insurance Lawyers Build Your Case
Bad faith cases are won with documents and timing. Here is how we approach a claim from the first call forward.
01
Free Case Review
We review your policy, your injuries, and every step of how the insurer has handled your claim.
02
Build the Record
We gather the claim file, denial letters, correspondence, and medical records that show what the insurer knew and when.
03
Notice and Demand
We send the required written notice or a Stowers demand where it fits, putting the insurer on the clock.
04
Negotiate From Strength
We press for a fair settlement, and insurers know we are prepared to try the case.
05
File Suit and Try the Case
If the insurer will not pay what it owes, we take your claim to court in Travis County or wherever it belongs.
You can help your case today. Keep a log of every call with the insurance company, including the date, the representative’s name, and what was said or promised. Save every letter, email, denial, and settlement offer. That paper trail is often what shows a pattern of unreasonable conduct.
Meet the Byrd Davis Trial Lawyers Behind Your Claim
Bad faith claims tied to serious injuries are trial work, and our attorneys are trial lawyers first.
Board Certified in Personal Injury Trial Law and Civil Trial Law by the Texas Board of Legal Specialization.
Kevin Henrichson
Board Certified in Personal Injury Trial Law by the Texas Board of Legal Specialization.
Robert and Kevin work alongside attorneys Hunter Wallen and Carson May, so your case has a full trial team behind it from the first demand letter through verdict if it comes to that.
Why Austin Clients Choose Byrd Davis Alden & Henrichson, LLP
We are not a volume firm, and you will not see us on a billboard. Clients find us through referrals, past clients, and their own research. Insurers know which law firms try cases and which do not. As true personal injury trial lawyers, we often reach fair settlements without going to court, because the other side knows we can win in the courtroom if needed. You can review some of our case results, and the firm has been recognized by U.S. News & World Report as one of the Best Law Firms in the country.
Frequently Asked Questions About Austin Bad Faith Insurance Claims
Do I have a bad faith insurance claim in Austin?
You may, if an insurer delayed, denied, or underpaid a valid claim without a reasonable basis, misrepresented your coverage, or failed to investigate. A denial alone is not proof of bad faith. An attorney can review your policy and claim history to tell you whether the insurer’s conduct crossed the line under Texas law.
How long do I have to file a bad faith insurance claim in Texas?
Generally two years from the date the unfair conduct occurred or was discovered, under Texas Insurance Code Section 541.162. Texas law also generally requires 61 days of written notice before filing, and your policy may contain its own deadlines, so it is important to act early.
Can I sue the at-fault driver’s insurance company for bad faith?
Texas law generally does not let an injured person bring a direct bad faith claim against the other driver’s insurer, because that insurer’s duties run to its own policyholder. However, if the insurer unreasonably rejects a reasonable settlement demand within policy limits, the Stowers doctrine may make it responsible for a judgment above those limits.
What if my own UM/UIM insurer is delaying my injury claim?
Your uninsured/underinsured motorist carrier is your own insurer and owes you fair treatment. These carriers often dispute fault or the value of your injuries before paying. If the delay is unreasonable, you may have claims under Chapter 541 and the Texas Prompt Payment of Claims Act in addition to your UM/UIM benefits.
How much does it cost to hire a bad faith insurance lawyer?
We handle injury-related bad faith claims on a contingency fee basis, so you pay no fee unless we win. Texas law also allows courts to award reasonable and necessary attorney’s fees when an insurer violates Chapter 541.
Do I need to file a complaint with the Texas Department of Insurance first?
No. A complaint with the Texas Department of Insurance is separate from a lawsuit and is not required before you pursue a bad faith claim. A complaint can create a useful record, but it does not recover damages for you, so it is worth speaking with an attorney about which steps to take first.
Talk to an Austin Bad Faith Insurance Lawyer Today
Since 1959, Byrd Davis Alden & Henrichson, LLP has stood up for injured people across Austin and Central Texas. Our board certified trial lawyers know how insurers evaluate claims, and they know what it takes to make an insurance company take an injury claim seriously.
If you believe your insurance company has handled your injury claim in bad faith, do not hesitate to get answers. Contact our office or call (512) 454-3751 to schedule a free consultation with an Austin bad faith insurance lawyer.