Texas law imposes a general duty of good faith and fair dealing on isurance companies. In essence, it means that an insurance company has a duty to deal fairly and in good faith with an insured. The duty is imposed because of the following public policy reasons:
the unequal bargaining power which would allow unscrupulous insurers to take advantage of their insureds' misfortunes in bargaining for settlement or the resolution of claims;
without such a duty, insurers could arbitrarily deny coverage and delay payment of the claim with no more penalty than the interest on the amount owed; and
an insurance company has the exclusive control over the evaluation, processing and denial of claims.
Unfortunately, the Texas Supreme Court has gradually chipped away at policy holder rights as the insurance industry has gained political power in Austin over the past dozen or so years. It is important to contact a lawyer if you believe you or your business in Texas are not being dealt with reasonably by an insurance company.