What Are the Important Elements of Bad Faith Insurance?

When it comes to settling a claim, insurance companies are in the driver's seat. They have more expertise, strength in negotiations, and financial resources than the policyholder. Recognizing this, many courts find in every insurance policy an obligation of good faith and fair dealing.

If you do not act reasonably in the collection, prosecution or settlement of your claim in your insurance company, you may be able to sue. State law defines how bad faith is defined in the sense of insurance and when you need a bad faith insurance lawyer. A claim may proceed in accordance with the common law of courts or a claim based on a violation of the state's statute. Let us look closely at what constitutes bad faith to better understand this legal claim.

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Bad Faith Law Elements

The features of bad faith in common law are not the same from state to state. Some states define misrepresentation as a behavior that is "unreasonable or unjustified." Taking a fault means a ‘fairly debatable' rejected claim and that is the condition the insurance company understands. Further complicating matters, some countries view this claim as a breach of the contract, and it is incorrect in other countries.

Under common law, the insurer is responsible for the good faith and fair treatment of its policyholders due to the special relationship between the parties. In general, proving a common law, bad faith claim requires the policyholder to demonstrate two elements:

  1. The incentives promised by the program have been refused. In this first example, you must determine that under the terms of your agreement, you have a valid claim. You must also have documents that the insurer has refused your claim. Many states require you to make a final request before a lawsuit is filed.

  2. The reason why the benefits were withheld was unreasonable. The argument that the insurance company behaved fairly was critically determined based on the circumstances and evidence as they existed at the time of the decision. Liability will only be observed in Oklahoma, for instance, where a complaint is knowingly rejected on reasonable grounds. Mere error is never sufficient to prove bad faith.

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Elements of Bad Faith Insurance

Like other companies in Oklahoma, insurance companies have a duty of good faith and fair dealing that allows their clients to treat them fairly and honestly. An insurer that unjustly refuses to provide insurance or offers inadequate protection for a claim that falls into the customer's plan may be subject to a customer's bad faith lawsuit. Bad faith can take many forms, for example:

  • Excessive delay in addressing reporting statements.

  • Unwarranted denial of reporting.

  • Lying about the advertising coverage of a client or the truth of a denial of reporting.

  • Failure to clarify correctly or accurately why a statement has been rejected.

  • Failure to try to settle a case in good faith where the insurer is fairly held liable.

  • Edit the policies or contract without the consent of the policyholder and use these unlawfully changed documents to deny the request.

  • Cancel a contract to avoid a valid claim from being paid.

If You Are a Victim of Bad Faith

The first thing you should do if you thought you were the victim of bad faith is to test your rule carefully. Tell your insurer to provide you with a copy if you do not have a copy. Keep a close eye on all correspondence with your insurer including the dates and times of any telephone calls, the names of the representative and all complaints or grievances received. You will have to prove that before taking legal action you have tried to resolve your claim with your insurer. An experienced bad faith insurance lawyer in Oklahoma from The West Law Firm will help you make it clear to your insurer that you are willing and able to take legal action if your claim appears to be rejected unfairly by the appeal process by negotiate a settlement on your behalf.

** Disclaimer: The above article does not imply a relationship between attorney and client, nor is it legal advice.