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Understanding bad faith insurance claims

On Behalf of | May 12, 2023 | Insurance Bad Faith

When a consumer in Oklahoma takes out an insurance policy for a vehicle, home or other purpose, the expectation is that the insurance company will pay when a legitimate claim is filed. Many times, there are no issues when one files a claim with an insurance company. But on occasion, legitimate claims go unpaid because the company doesn’t want to honor the policy with the customer. When this happens, it’s called bad faith, and it can leave the consumer in a financial bind. 

What does bad faith mean? 

Consumers take out insurance policies in good faith, believing that the company will provide compensation when the need arises. An insurance company does have the right to refuse to pay an invalid claim due to fraud or when the terms of the policy are not met for various reasons. Bad faith happens when a company refuses to pay a legitimate claim.  

A bad faith insurance claim may include refusing to investigate the claim in a timely manner, leaving the consumer with financial hardship when trying to recover from a devastating event. Insurance companies may try to settle for less than a reasonable amount for the claim or refuse to pay at all. Another way insurance companies practice bad faith is by requiring excessive amounts of evidence from the claimant or requiring more paperwork than is standard, in efforts to delay the payout process. 

Consumers have legal rights 

When someone purchases insurance in good faith, it’s expected the insurance company will pay for a legitimate claim. If this doesn’t happen, the customer may have the right to file a civil lawsuit against the insurance company for bad-faith practices. Oklahoma residents who believe they have been a victim of bad-faith insurance practices can contact an attorney to explore what legal options are available.