What is Insurance Bad Faith?
Under Oklahoma law, insurance companies have a legal duty of Good Faith and Fair Dealing to everyone they insure. What this means is that an insurance company has a duty to assist you when you need to make a claim; and the insurance company must look for reasons to cover you claim.
When insurance companies breach this duty of good faith and fair dealing, they are liable to their insureds for claims of bad faith.
Under a claim for bad faith, the insured may seek damages in addition to the contract damages under the policy, including damages for:
- Other Financial losses;
- Embarrassment and loss of reputation; and
- Mental pain and suffering.
Additionally, if the insured can demonstrate sufficient recklessness on the part of the insurance company, the insured can seek punitive damages, as well.
How does an insurance company breach its duty of Good Faith & Fair Dealing in Oklahoma?
- Failing to conduct a reasonable investigation of the claim;
- Denying the claim without a legitimate basis
Inadequate or Delayed Investigation
Insurance companies commit bad faith when they refuse to properly investigate a claim, delay investigation of the a claim, or outright deny a claim without reasonable basis.
Oklahoma law mandates that an Insurance Companies conduct a full, fair and prompt investigation of the claim. An Insurance Company may not deny a claim or any part of a claim based upon insufficient information, speculation or biased information.
Oklahoma law mandates that an insurer must look for coverage. The Oklahoma Insurance Department has defined “good faith” as requiring that an insurer attempt to find a basis to pay the claim rather than look for reasons to deny it.
Competing against the insured and treating the claim as adversarial
A first-party claim is not an adversarial or competitive process. To the contrary, an insurer should assist the policyholder with the claim.
When the insurer spends more effort trying to prove the insured wrong, as opposed to assisting the insured with the claim, the insurer may be breaching its duty of good faith.
Providing a basis for the denying, in writing
The Insurance company must document its denial of your claim in writing.
Are legal fees recoverable against the Insurance company?
If you prevail in your bad faith lawsuit, you may also win recovery of yoru attorney’s fees if you also sued under breach of contract theory. If the insurance company refused to pay your claim which should have been covered under the policy, then they may be liable for your attorney fees.