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What does it mean to say a claim denial was in bad faith?

On Behalf of | Jan 24, 2020 | Denied Insurance Claims

If your insurance claim was denied in bad faith, you could win extra damages in a lawsuit. In addition to the cost of the loss you were claiming, you could be awarded compensation for any other financial losses caused by the bad faith of the insurance company, for emotional distress caused by the misconduct, and for any embarrassment or loss of reputation you suffered due to the improper claim denial. In some cases, you may be eligible for punitive damages, which are meant to punish bad actors.

But what is a bad faith denial? In Oklahoma, it must be more than a reasonable difference of opinion about what your policy covers. To be considered a bad faith actor, the insurer can’t have made an honest mistake. At the same time, their conduct does not have to have been reckless.

That said, you can only get punitive damages if you can show the insurer acted with wanton or reckless disregard for your rights.

It’s all about being unreasonable and ignoring the duty of good faith and fair dealing. All insurers have a duty of good faith and fair dealing. To prove bad faith in Oklahoma, you have to prove:

  • Your claim was covered under the policy
  • Your insurer acted unreasonably, under the circumstances, in denying your claim
  • The insurer failed to deal fairly and act in good faith when handling the claim
  • The insurer’s failure to deal fairly and act in good faith directly caused damages to the insured

What does it mean to say the insurer failed to deal fairly and act in good faith? Generally, it means that the insurer knew or should have known that the claim was properly covered by the policy but nevertheless denied or delayed that claim.

What are some examples of bad faith?

There are many ways that insurers may act in bad faith. Some of those include:

  • Misrepresentation of the policy provisions or relevant facts
  • Refusal to acknowledge or act promptly on a claim
  • Failing to take reasonable steps to investigate and process a claim
  • Refusing to either approve or deny a claim within a reasonable time
  • Denying a claim without providing a reasonable explanation or reasons for the denial

Not every negative or frustrating action taken by an insurance company is evidence of bad faith, but there are a wide variety of common industry tactics that can be considered bad faith.

If you have made an insurance claim that has been unreasonably delayed or denied and you can’t get action from your insurance company, you should have a lawyer evaluate your claim for evidence of bad faith.