Arnold v. National County Mut. Fire Ins. Co
In Arnold v. National County Mut. Fire Ins. Co., 725 S.W.2d 165 (Tex. 1987), the court found there is a duty on the part of insurers to deal fairly and in good faith with their insured. Id. at 167.
In doing so, the court noted that it had declined to impose an implied covenant of good faith and fair dealing in every contract but, "a duty of good faith and fair dealing may arise as a result of a special relationship between the parties governed or created by a contract." Id.
In the course of its discussion and in the context of insurance contracts, the court specifically noted that an insurance company had exclusive control over the evaluation and processing and denial of claims and that in such instances, the nature of insurance contracts gave rise to unequal bargaining power "which would allow unscrupulous insurers to take advantage of their insureds' misfortunes in bargaining for settlement or resolution of claims." Id.