In the Sooner state of Oklahoma, the Oklahoma State Insurance Department requires every insurance company to act professionally and in good faith when handling legitimate insurance claims from those individuals and entities the company insures.
In other words, insurance companies serving the state of Oklahoma are required by state law to treat their customers fairly – including prompt claim payments for their current customers.
Unfortunately, some insurers fail to honor (and specifically dismiss language to include in their policies) their legal obligations to their insureds. Some examples of these are:
- The unreasonable denial or failure to investigate a legitimate claim.
- An unreasonable Delay of a legitimate claim – this is easily accomplished by requesting unnecessary information to process a claim that they know is valid.
- The deliberate undervaluation of a claim.
- Unreasonable policy language interpretation.
- Misrepresenting policy benefits and coverage.
- Failing to –
- Explain a claim denial
- Defend the insured individual or entity against 3rd party claims
- Disclose policy limits
- Imposing arbitrary time limits.
- Issuing a fraudulent policy, to name a few.
This mistreatment or act of bad faith often leaves paying customers feeling helplessly betrayed.
Oklahoma’s Implied Clause
According to Oklahoma’s Supreme Court – each insurance contract, as a matter of public policy, includes an implied (i.e., unwritten) clause – requiring the insurer to deal fairly and to act in good faith.
An important legal caveat to these implied rules is that it ONLY applies to claims made by the person or entity that paid the premiums – known in the trade as a first-party claim. In Oklahoma, bad faith laws do not apply to third-party claims – claims submitted to someone else’s insurance company.
As a consumer purchasing insurance, there should be no doubt that on-time paid premiums should entitle you to be covered for legitimate losses. When a licensed agent or insurance company acts in bad faith, the state provides legal remedies for compensation.
What is a “Bad Faith” Claim?
As noted above, an act of bad faith is defined by the breach of an implied, legal obligation to deal fairly and in good faith. When paying an insurance payment on time and in good faith, one can reasonably expect their insurer to do the same when the insured faces a loss.
Insurance companies operate like most businesses with the goal of generating a profit. Therefore, you should not be surprised to come up against an insurance company that seeks to minimize or avoid paying on a submitted claim.
What Kind of Damages are Awarded in Bad Faith Claims?
Oklahoma’s laws regarding unfair claim settlement practices and damages (Title 365, Chapter 15 (Subchapter 3) & Title 23) are written as a legal discouragement for insurance companies and professionals who behave unlawfully or unethically. As a result, in a bad faith case involving insurance, it is possible to seek three types of damages.
These damages represent the actual claim amount that is rightfully owed to the insured under the policy – up to the stated policy limits.
These damages represent compensation to the insured for the insurance company’s act of bad faith. Bad faith compensatory damages that may be recoverable in a lawsuit include –
- Financial losses that the insurance company’s bad faith caused.
- The emotional anguish and concern that is caused by the insurer’s improper, unprofessional, or unethical conduct.
- Embarrassment and loss of reputation because of the denied/delayed payment, among others.
Consequential or Special Damages
The goal of these types of damages is to make the plaintiff whole. In a bad-faith lawsuit, the defendant has liability for foreseen (and unforeseen) damages which were directly influenced by the insurance company’s misconduct.
Compensatory damages often are imposed to offset the emotional toll of someone’s pain and suffering. These non-economic damages (known as non-pecuniary damages) are often challenging to quantify but legitimate compensation for a legally recognized harm that affects someone’s quality and enjoyment of life.
Compensatory damages are a legal tool that offers the legal system a way to set acceptable behavioral standards and to express to the injured person warranted public sympathy.
Punitive or Exemplary Damages
Punitive damages, as its name implies, are damages that are imposed punitively (as punishment) to hopefully deter this insurance company (and others) from attempting to act in bad faith to other insureds and policyholders. Punitive damages are awarded in addition to contract damages and compensatory on a case-by-case basis, and the ultimate outcome will depend on the level of egregiousness characterized by the insurance company’s willful or wanton choices. Punitive damages, which are never mandatory, are referred to as exemplary damages as they seek to make an example of the defendant.
Determining the actual, punitive award involves a deliberate and cautious review of the defendant’s mental state and conduct at the time of the bad faith act. This is best accomplished with the legal skill and assistance of an experienced bad faith attorney.
Have You Had an Experience with Bad Faith Claims in and around the Edmond, Oklahoma Area?
If you have faced bad faith actions by an insurance company, it is crucial to consult with an attorney that has experience with bad faith claims as early as possible.
The state of Oklahoma’s bad faith law protects its citizens from unethical, inappropriate, or illegal claim practices. A bad faith lawsuit is a legal tool that can be used to correct an unfair situation.