Insurance Bad Faith FAQs
What general obligation does my insurance company
owe to me regarding my claim?
In most states your insurance company has a duty to handle your claim promptly, reasonably, and in "good faith."
What is insurance bad faith?
Insurance bad faith is any matter regarding an insurance claim by an insured that is wrongfully denied by the insurance company. An insurance policy is considered a contract between you and your insurance company. This contract requires that your insurance company acts in "good faith" toward you. When an insurance company unreasonably withholds the benefits of the policy from its insured, it is considered to be in "bad faith." Insurance companies may attempt to deny claims for any reason they can. Additionally, even when an insurer acknowledges that a claim or lawsuit is covered by the insurance policy, it may attempt to underpay the claim.
What does "good faith" involve?
The duty of "good faith" means that your insurance company must:
- Adjust your claim by either paying it or denying it within a timely manner
- Attempt to find a basis to pay the claim rather than trying to find reasons to deny it
- Cooperate with you regarding the claim including timely response to letters and phone calls
- Tell you in writing specifically why they are denying your claim by outlining each contract term or provision upon which it relies
Do I owe any obligations to my insurance company
concerning my claim?
Yes. You also have a reciprocal obligation to act fairly and deal in good faith. This includes:
- Submitting your claim for benefits on a timely basis
- Providing all information that the insurer reasonably asks for as they are entitled to it by law
- Giving a statement under oath concerning the claimed loss
- Generally cooperating with the insurer regarding the loss
What if my insurance company seems to be dragging its feet
on my claim?
Put your complaint in writing and send it to the insurance company. Know who the claim adjuster is and correspond with him or her in writing. Ask who the claim adjuster's supervisor is and send them a detailed letter. If the foot dragging does not appear to stop, you may need to contact a lawyer.
What should I do in the event of a claim?
You should immediately:
- Notify the insurance agent and insurance company
- Collect and review the insurance policy as it relates to the relevant provision(s) of the claim
- Document all events, notes, and communications made, whether written or verbal with the insurance company and those related
- Submit your claim promptly as most state laws and insurance policies require that claims be presented within a limited period after the loss
Do insurance companies have the right to deny a claim?
Yes. Insurance companies have the right to deny a claim where the insured has not lived up to the insurance contract, when the claim is not covered by the policy, or due fraud.
What can I recover if I sue my insurance company for bad faith?
If the court finds the insurance company to have acted in bad faith, you may be eligible to recover the benefits of the policy for the claim as well as all consequential losses and damages you suffered as a result of the denied claim. This includes any attorneys' fees that you had to pay in order to force the insurance company to live up to its contractual obligations.
Why do insurance companies commit bad faith?
There is good economic reason for insurance companies to commit bad faith. Insurers receive thousands of claims every day, many of which are wrongfully denied. Very few people dispute this wrongful denial and thus insurance companies save considerable amounts of money that they would otherwise be obligated to pay.
If my insurance company denies my claim, do I have any legal rights?
Yes. If an insurance company fails or refuses to honor its contract and pay a valid claim, you have the right to bring a civil action for damages against that insurance company. In addition to suing for a breach of contract, you may be able to bring a claim seeking damages based upon the insurer's bad faith handling of the claim.
Do damages for an insurance company's bad faith
go beyond what I would be entitled to under the contract?
Yes. In addition to what the insurance company owes you under the policy plus any interest, you may also be able to recover "consequential damages" (money you had to pay out of pocket because of the denial), "extra contractual damages" to compensate for mental and emotional distress, and, in some cases, "punitive" or "exemplary damages."
What can I sue for if my employee benefit plan insurance company
wrongfully denies my claim?
The most that you can typically recover in an ERISA lawsuit is the amount of benefits due, interest, costs and a discretionary award of attorney fees. So, even if your case proceeds all the way to judgment, the most that the insurance company can lose is the amount that it would have paid if it had handled the claim properly in the first place, plus attorney fees.
What do I do now since my claim was denied
and my appeal was denied by the insurance company?
It's probably time to consult an Oklahoma attorney with experience in insurance law and bad faith litigation.
We can handle your potential legal case if you are in any of these Oklahoma cities. Even if your city is not listed you may still speak with one of our Oklahoma attorneys by filling out our contact form or calling us toll-free at 1 (866) 664-0400.
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