Insurance Bad Faith

Oklahoma Insurance Bad Faith

When you, a family member or someone you live with have an insurance policy with an insurance company, it is a contract that both parties must uphold. On your side, you are obligated to pay the premiums when they come due. The insurance company, on the other hand, is obligated to pay all legitimate claims you make on your policy.

If you file a claim with your insurance company, they are required by law to act in good faith in evaluating, investigating, processing and paying legitimate claims.

Insurance bad faith occurs when:

  • Claims are not paid on a timely basis
  • Legitimate claims are denied
  • Covered claims are underpaid

Unfortunately in Oklahoma most, if not all, insurance companies now go to great lengths to reduce or eliminate their liability, or better put responsibility, for insurance claims. These types of claims include request for coverage under policies of uninsured/underinsured motorist coverage, health insurance, homeowners’ insurance coverage, and too many others to list.

Because the insurance companies are in a position of trust, the law in Oklahoma holds these companies to a higher standard. This occurs whether the insurance company is located here in the State of Oklahoma or is an out-of-state company that merely does business here. In many cases, once we have been able to prove that an insurance company has acted in bad faith, our clients have been able to recover amounts in multiples of what the claim was initially worth.

On January 17, 2008 the Florida Office of Insurance Regulation suspended Allstate’s right to issue new policies to any customers in the state until it complied with a subpoena for a confidential report from a New York consulting firm, McKinsey & Co. The report helped Allstate redesign its claims-handling process in the 1990s. According to regulators, Allstate redesigned the process to maximize revenue by reducing payments on claims without considering the merit of the claim, then taking policy-holders who ask for more money to court. In other places, this strategy has been described as “Deny, Delay, Defend.”

Just because Allstate was punished for its actions in Florida, doesn’t mean the people of Oklahoma are not also victims. Furthermore, even though Allstate was at the center of this battle, a number of insurance companies received reports from the same firm, and many of them redesigned their claims process at the same time. As a result, insurance companies here in Oklahoma are posting record profits while many policyholders are left without money to replace automobiles, homes or cover expenses incurred for such things as medical expenses.

Insurance companies occasionally deny some claims for a legitimate reason, however most of the time the insurance company is merely trying to cut costs and increase profits. If your claim has been denied, payment delayed or you simply have not been paid what your claim is worth, it is likely that you have been a victim of insurance bad faith.

Know your rights:

Oklahoma law requires that insurance companies treat you in a manner that amounts to good faith and fair dealing. This behavior of your insurance company is not optional, it is absolutely required. Examples of insurance company behavior that likely is the result of bad faith include, but are not limited to the following:

  • The insurance carrier offers you a quick settlement for below your medical expenses or the same amount.
  • Your insurance company seems to be looking for an excuse not to pay for injuries or damages that are covered in your policy.
  • The insurance company tells you that your policy means something other than what it seems to say.
  • The insurance company is extremely slow to respond to a routine claim like an auto accident or property damage to your home.
  • The insurance company is vague about what provisions do or do not apply in your case.

If your insurance company is acting in bad faith, do you need an attorney? Yes.

Insurance bad faith is an extremely complicated area of the law.  If everyday individuals were able to ascertain what an insurance carrier is and is not permitted under Oklahoma law, we’d be out of a job!

Good faith and fair dealing standards

First, understand the expectations placed by Oklahoma law on your insurance company. The law requires that your insurance company:

  • Failing to pay the insurance benefits that you are entitled to under the policy at the time when the insurance company knows you are entitled to those benefits;
  • Withholding payment of benefits from you knowing that the claim for those benefits are valid;
  • Refusing to honor your claim without a legitimate, arguable reason and wholly lacking any evidence or support for its refusal;
  • Unreasonably delaying payment of some benefits and denying your claim for some benefits without a reasonable basis;
  • Refusing to pay your claim for reasons contrary to the express provisions of the law;
  • Intentionally and recklessly misapplying the provisions of an insurance policy;
  • The insurance company uses its unequal wealth and bargaining position to overwhelm and take advantage of you and to effect an economic gain for its self by not paying an amount that it owed by virtue of the insurance contract;
  • Failing to properly investigate your claim for benefits;
  • Failing to properly evaluate the investigation that was done on your claim for benefits;
  • Failing to adopt and implement reasonable standards for the prompt investigation and handling of claims arising under the policies including the claims you have made; and
  • Failing to attempt to act in good faith to effectuate a prompt, fair settlement of your claim.

Homeowner’s Insurance

If you own a home you probably rely on homeowner’s insurance to cover your losses and help you rebuild should your home be damaged or destroyed by a catastrophic weather event such as a tornado or hailstorm. Tornados, hurricanes and other storms are completely out of your control, and it seems like this would be an open and shut case, the type of claim that raises few questions. Sadly, insurance companies often try to deny or underpay storm damage claims.

Before hurricane Katrina, insurance company tactics and attempts to deny valid claims received very little publicity. Policyholders believed that their coverage was adequate and that insurance companies would pay for storm damage. In reality, insurance companies use several approaches to avoid paying when your home is damaged.

Denying claims:
 An insurance company may try to deny your claim by claiming that either the damage was not caused entirely by the storm or that some element of the cause of damage is not covered by your policy. For instance, storms may cause water damage which should be covered by your homeowner’s insurance, but the insurance company may try to claim that the water damage is due to subsequent flooding which would not be covered by homeowner’s insurance but by a separate flood policy.

Offering less than you deserve:
 Rather than outright denying your claim, an insurance company may simply offer you less than what you are entitled to, hoping to avoid a dispute by offering you something. They may offer to pay for part, but not all, of the damage.

Delaying claims:
When insurance companies delay payment they draw interest on the money that is owed to you. Even if they eventually payout, they have benefited from your waiting. Delaying your claim means that not only will the insurance company make money, but your expenses can significantly increase. Your property may incur further damage, such as untreated mold growth and continuing weather damage, due to delayed repairs. Your living expenses while waiting for repairs will be higher. You may miss work or lose business. The delay could even affect your children’s progress in school. Insurance companies also know that if they hold out and make you wait, you are likely to accept a lower offer because you are desperate to receive your much need money.

When an insurance company denies your claim or offers to pay too little you can dispute their decision. In order to do this effectively, you need to be prepared. Here are some things that you can do to help your case:

  • Take pictures – photograph all of the damage.
  • Take notes – write down everything that has happened, including the dates and times of any and all conversations you have had with the insurance company and the results of those discussions.
  • Keep receipts for everything – this includes living expenses, such as hotel bills and eating out while you are waiting for your home to be livable again, expenses for repairs which you pay for out of pocket, and any other money that you must spend due to the damage to your home.
  • Get an estimate – talk to a contractor and get an estimate for the cost of repairing your home. Do not rely solely on you insurance company’s estimate.
  • Demand an explanation – if the insurance company denies part, or all, of your claim insist that it informs you in writing of the exact wording in your policy upon which it is basing its denial. This not only lets you know what you are up against, but it keeps the insurance company from changing its story later down the road.

If you must take your claim to court, you should be encouraged by the fact that the courts do not look favorably on insurance companies that try to get out of paying valid claims. Recent cases have resulted not only in the payment of claims but in punitive damages awarded to punish insurance companies for their bad faith.

We will evaluate your claim for free, and we will represent you on a contingent fee basis, which means we do not get paid any attorneys’ fees UNTIL you recover on your claim.

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