July 8, 2022
When your insurance company refuses to pay a claim that you believe you deserve to receive, you may hear the term “bad faith” used to describe the situation. But what is an example of bad faith, and what does it mean? It simply means that an insurance company doesn’t follow through on the terms of your policy when you submit a claim. It means that you believe the insurance company is being dishonest when it comes to fulfilling its promises to you.
Some examples of insurance bad faith tactics include:
- Altering the terms of the insurance policy after you file a claim.
- Coercing the policyholder to sign documents that could reduce the claim payment without giving a full explanation.
- Coercing or paying doctors to testify that certain health procedures are not necessary.
- Creating deadlines for submitting claim information that aren’t part of the policy.
- Delaying payment on an insurance claim without a valid reason.
- Denying a valid claim.
- Failing to investigate the case fully and then making a decision on the claim without all of the facts.
- Failing to tell the policyholder about an aspect of the coverage that would increase the claim payout.
- Ignoring the policyholder’s questions or the questions of the policyholder’s legal representative.
- Misrepresenting the language of the policy to confuse the policyholder.
- Stalling the payout process by requesting multiple documents without a valid reason.
- Threatening the policyholder with legal action for questioning the claim payout or for making a harmless error.
- Trying to negotiate a reduced payout, even though the policy calls for a full payout under the circumstances.
What Is Considered Bad Faith?
Understand that every time an insurance company denies a claim, it doesn’t necessarily rise to the level of what is considered bad faith. Instead, Oklahoma Statute §36-1250.5 states that insurance companies have to participate in unfair claim settlement practices in order to be guilty of bad faith. Simply being rude or disrespectful to a customer who is making a claim does not constitute bad faith. The insurer must treat you unethically or illegally to create a bad faith situation.
Outside of these generalities, Oklahoma laws don’t specifically lay out what must occur to fit the general definition of bad faith. Some cases simply don’t fit neatly inside a statute, which is why laws like this often avoid specifics. Having some gray area in the law can be a good thing, as it allows our law firm to present your case without the restrictions of specific rules in the law. The team at Doug Terry Law knows what bad faith tactics look like. We are ready to convince a judge that the behavior of the insurer in your case illustrates those bad faith tactics.
What Are the Elements of Bad Faith?
When wondering what the elements of bad faith are, understand that in Oklahoma, an insurance company making an honest mistake is not an element of bad faith. The courts want to see evidence that the insurance company behaved in a purposeful manner to create the unfair situation regarding your claim. In other words, a key element of a bad faith situation requires that the insurer has intent to try to cheat or harm you in the settlement.
Another important element of a bad faith situation would involve leaving you with some sort of financial hardship because of the insurance company’s actions. Perhaps you don’t receive a claim payment that you deserve because the insurer is causing a delay on purpose or is denying your claim without a just reason. The insurer also would be acting in bad faith if it tries to reduce the amount it should pay you by failing to disclose information about your policy that would give you a higher payment amount.
Specific Bad Faith Examples
It may be easier to understand what constitutes bad faith on the part of an insurance company through the following specific bad faith examples.
Auto Insurance Claim Involving Bad Faith Tactics
If you make a claim against your auto insurance policy after damage in a hit-and-run crash, you expect the insurer to give you a payment (minus your deductible) for the damage. If you have a newer car, this payment could be quite substantial. If you have a loan against this car, your loan originator would require that you have comprehensive insurance coverage to guard against this exact situation, so you know you have hit-and-run coverage.
However, the insurance company may choose to deny paying part of the amount you deserve. The insurer may say that you had a claim for weather damage to the car several months earlier, and it now says this pre-existing damage means you deserve a smaller settlement amount after the crash. However, the insurer would be acting in bad faith if it does not do a full examination of the situation. Had it done the proper examination, it would know that you repaired the previous damage, and the car was in like-new condition before the hit-and-run accident
As an auto insurance claims lawyer, our team knows how to counteract this action from the insurer. We could find witnesses who would testify that your car had no damage before the accident. We also could speak with the body shop that did the work on the weather damage, showing that you repaired it properly, restoring the full value of the car before the hit-and-run crash.
Health Insurance Claim Involving Bad Faith Practices
When you have health insurance, you count on it helping you through serious health problems. Should you become incapacitated and need emergency surgery, you would expect the insurer to cover it, even though you were unable to contact the insurer ahead of time about the procedure because of your condition.
During the emergency surgery, your doctor discovers that you will need to have the same type of surgery several times over the next few years to fully restore your health. You may find that the insurance company, upon learning this information, suddenly will deny the payment claim on your first surgery. It may cite a section of your policy that states you need to notify the insurer ahead of time about your surgery. In reality, it does not want to pay for your future surgeries and care, so it denies the claim for payment for the first surgery. This sets a precedent for not paying for this type of surgery and any other complications you may have related to the emergency surgery.
In denying this claim, the insurance company fails to disclose that the policy waives the rule about preauthorization in the case of an emergency. It withholds this information from you on purpose. Our health insurance claims lawyer will work to defend your rights in a case like this. We can decipher the sometimes confusing language in a health insurance policy, and we will make the insurer live up to the promises in it. Withholding information in the policy from you as the policyholder is a clear example of bad faith.
Home Insurance Claim Involving Bad Faith Actions
After you suffer damage from a burst pipe which causes flooding in the basement of your home, the insurer promises to send an adjuster to inspect the damage. However, this doesn’t happen for several weeks. By the time the adjuster inspects the property and writes a claim report, you discover far more new damage. You now have black mold and poor air quality throughout the house because the insurance company delayed doing the investigation. This led to a delay in your receiving payment, leaving you unable to hire someone to do the repairs. You believe you should receive payment for this additional damage, but the insurer denies your additional claim.
Our homeowners insurance claims lawyer will seek to show that the insurer acted in bad faith by delaying the investigation of your claim and in denying payment for the extra damage. We can help you bring a lawsuit against the insurance company to force it to pay for all of the repairs your home now needs, rather than only paying for the original damage.
Bad Faith Tactics Involving Threats Over Making a Claim
When you are preparing to make an accident claim, you might contact the insurance company to determine what forms you need to complete. The representative may send you the forms. However, instead of giving you help with the instructions for completing them, the company rep may tell you to be very careful with the submitted information. The representative may tell you that any error made on the form, including something as simple as an incorrect date, will result in a case of insurance fraud, leading to criminal charges against you.
If you are a little uncertain on some of the facts surrounding your accident and claim, this threat may convince you not to file the claim. When the insurance company makes statements that are untrue or that are only partially true to you as the claimant, using these statements to try to convince you stop the claims process, this is an example of bad faith. Our team will work hard to show that the insurer’s actions are harmful and that you deserve a settlement for this bad faith tactic.
Let Us Represent Your Interests When You Are the Victim of an Example of Bad Faith
As an insurance attorney who regularly represents clients who are the victims of bad faith actions from an insurer, Doug Terry knows just how frustrating these kinds of cases can be for clients. You paid your premiums on time. Your insurance company made promises at the time you signed up for your policy. You have an expectation for the insurer to follow through on its promises when you need it the most.
Yet, the insurance company sometimes puts profits over the care of its clients. This is despicable behavior, but it happens more often than you may think. You need the payout from the insurance company to keep your financial life afloat after an accident or disaster. Ultimately, you may need to hire legal representation to convince the insurance company that it needs to treat you fairly. Some insurers simply refuse to listen to you as the policyholder until you have an attorney on your side.
We Will Help You Understand Your Rights Under Insurance Law
The majority of people don’t deal with insurance laws in the state of Oklahoma and the language in insurance policies on a regular basis. This gives the insurance company a significant advantage when discussing these items with its clients. An insurance company acting in bad faith may try to convince you that you don’t deserve a claim payout, citing some random part of the policy. The truth is, though, that if you simply had the experience needed to fully decipher the policy and law, you would know that the insurer is not being truthful.
This is where we can help. At Doug Terry Law, our team deals with insurance claims on a regular basis, representing people and businesses who are receiving unfair treatment because of bad faith actions. Before starting our law firm, Doug Terry worked for insurance companies, handling lawsuits. He later decided to become an advocate for people and companies who are the victims of unfair and bad faith tactics from insurance companies. He fully understands how the insurers operate in cases like this, which gives our team an advantage.