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Overview of Oklahoma’s bad faith laws

On Behalf of | Jan 10, 2021 | Insurance

Residents of Oklahoma City who pay for an insurance policy to protect their value property investments expect their insurance companies to come through and pay valid claims when they come up.

Unfortunately, too often when a claim arises, an insurance company will deny the claim, or underpay it, on flimsy grounds. This puts a customer in a bind because, while they could always sue, it takes a lot of time and money to do so.

When calculating the cost, a customer may feel forced either to accept an insurance company’s low-ball offer or to compromise with the company for a much lower payment than the customer deserves.

Oklahoma law demands that insurance companies act in good faith

To protect customers, Oklahoma’s courts and Legislature have both made laws that prevent insurers from dealing in bad faith.

While the specifics of these laws depend on an individual’s circumstances, in general, an insurance company has to put its customer’s interests on par with its own.

This means that while an insurance company may investigate and in some cases even deny claims, it may not act unreasonably.

For example, an insurance company may not have a practice of denying claims just to force a customer, who was less bargaining power, to accept a lower payment. They also may not, without a good reason, hold up payment on a valid claim.

Victims of bad faith insurance practices are entitled to damages

Victims of bad faith are entitled to full compensation despite the limits on their policy.

In addition to out-of-pocket costs and attorney fees, they may also receive payment for any costs and expenses that are the direct consequence of the insurance company’s bad faith.

For example, if the insurer does not agree to defend a claim, and a customer gets a court judgment entered against him or her, the insurer may be responsible to pay the judgment if it acted in bad faith.

In some cases, victims may even be able to obtain an award of punitive damages.