Most Oklahomans are aware that they can sue their insurance company for damages if the company wrongfully denies their claim for coverage. What many Sooners do not know is that a state law says that they can recover their attorneys’ fees from the insurance company if they are the prevailing party in the suit for damages. Likewise, insurance companies can recover attorneys’ fees from the insured if they prove that the insured refused a reasonable offer of settlement.
This statute has often been found to be in conflict that requires insurers to pay a valid claim within 60 days after it is filed. An Oklahoma Supreme Court decision has finally resolved the conflict in favor of the policy holder.
The dispute over an insurance claim
The insured owned a convenience store, and when the building’s roof was damaged in a storm, the owner filed a claim for damages with his insurer. The insurance company did not pay the claim within 60 days as required by statute. When the case went to trial, the insured won a verdict for $10,652. The insurance company then attempted to recover its attorneys’ fees from the insured by arguing that it was the “prevailing party” under the attorneys’ fees statute because the verdict in favor of the insured was less than the $45,000 that the company had offered before trial.
At this point, the case had been removed to federal court in Oklahoma and had been appealed to the 10th Circuit Court of Appeals. The circuit court certified the question to the Oklahoma Supreme Court.
The Supreme Court decided the case in favor of the insured by observing that an insurance company that fails to pay a valid claim within the statutory deadline of 60 days cannot be considered a prevailing party. The insurer’s status as a prevailing party does not depend upon whether it makes a reasonable offer after the 60-day period expires. If the company does not pay the claim within 60 days, it permanently loses its standing as a prevailing party.
This case is an important victory for policy holders. It removes a significant disincentive for suing an insurer who wrongly denies a claim. Before this case was decided, the possibility of being stuck for an insurer’s attorneys’ fees kept many policy holders from suing their insurers to reverse an erroneous denial of coverage. Now, with the help of a knowledgeable coverage lawyer, insureds can seek damages from their insurer without fear of being burdened with the insurer’s attorneys’ fees if they should lose.