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How do you know your insurance company acted in bad faith?

On Behalf of | Mar 8, 2018 | Blog

When you purchased an insurance policy for your car, your home or your life, among others, you agreed to make periodic payments in exchange for the peace of mind that if you file a claim after an accident, injury or damage to your property, the insurance company would be there to provide you with financial assistance you need.

You diligently made those payments, probably for years, but when you filed a claim, the insurance company failed to come through for you. The company you relied on denied your claim. The question then becomes whether the insurance company acted in “bad faith.”

What constitutes bad faith on the part of an insurance company?

Your insurance company owes you several duties, and breaching those duties could constitute bad faith. Some of those duties include the following actions:

  • Indemnification: If another party receives a court judgment against you or you enter into a settlement agreement with another party, your insurance company should pay (up to your policy limits) for it. Refusing to pay the claim could constitute a breach of this duty.
  • Investigation: The law obligates your insurer to conduct an investigation into your claim and place a value on it. Failing to conduct such an investigation, or even unreasonably delaying processing your claim, could mean the company acted in bad faith. 
  • Defense: Your insurer may owe you a duty to defend you against claims from others. In many cases, your insurer is required to bear the costs associated with defending you, but not always. The company may breach this duty by refusing to meet this obligation.

The cold, hard fact is that insurance companies are in the business of making money. If they can find a way to deny your claim, they will often do so. However, there are certain lines insurers cannot cross. If they do, you may be able to seek compensation from the company.

What can you do about it?

If you believe that your insurance company acted in bad faith, you have rights. However, simply calling up your agent and insisting that they pay the claim probably will not work. You may need to take legal action in order to resolve the situation. Insurance companies have teams of lawyers willing to argue that you aren’t entitled to payment of a claim, and going up against them on your own could cost you the compensation you deserve. 

Instead, you could enlist the advice and assistance of an Oklahoma attorney who can explain your rights and legal options and advocate for you whether at the negotiation table or in a courtroom.