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The ABC’s of an insurance bad faith claim in Oklahoma

On Behalf of | May 24, 2021 | Insurance Disputes

Insurance companies that operate in Oklahoma sell many different kinds of policies, ranging from whole life policies, homeowner’s policies, long term care policies, and the like. Regardless of the kind of policy that is involved, all insurers in Oklahoma have both a common law and a statutory duty to deal with their policy holders reasonably, straightforwardly, and above all, honestly. This duty is generally called a duty of good faith. If an insurer fails to exercise good faith in dealing with a policy holder’s claim, it may be liable for damages. An overview of the elements of a bad faith insurance claim demonstrates the nature of the duty.

Beginning at the beginning

The one essential requirement of a bad faith claim is the existence of a valid insurance policy. Anyone contemplating a bad faith claim should read the entire policy carefully to make certain that the claim is covered by the policy. The next step is making a written claim under the policy. Virtually all insurers have forms that the insured must use to make a formal claim. The insured should keep a copy of the claim form and any exhibits, such as photographs. If the insurer intends to deny the claim, it must do so within 75 days. The insurer must also provide the policy holder with a written explanation of the reasons for the denial. The insured must keep a copy of this writing.

Alternative steps

A policy holder who believe that the claim was wrongly or unreasonably denied has two alternatives: filing a complaint with the Oklahoma agency that regulates insurance companies or commencing a lawsuit.

The administrative complaint may trigger compliance by the insurer, but a company that is committed to its denial may be able to drag out the process. A court action may prompt quicker action by the insurer.

Elements of a bad faith claim

As noted, the existence of a valid policy is essential to a successful bad faith claim. The claimant must prove that a valid claim was filed with the insurer. Next, the insured must prove that the insurer failed to take a required action, such as thoroughly investigating the claim. Then, the claimant must show that the insurer’s action was unreasonable, either because the company ignored essential facts or because the company does not have reasonable procedures for investigating and paying similar claims.

Bad faith claims can become extremely complex. The assistance of an attorney experienced in bringing bad faith claims can be necessary to maximizing the chances for a recovery.