Bad Faith Tactics Used by Insurance Companies to Avoid Paying a Claim

Bad Faith Tactics Used by Insurance Companies to Avoid Paying a Claim

Posted July 10, 2017

Insurance companies are supposed to protect your financial best interests in the event that something should happen to you or your property. However, despite the very purpose of their existence, many insurance companies make it difficult for policyholders to file successful insurance claims. Some companies even go so far as to deny policyholders their rightful compensation altogether, citing reasons with no real backing. This is referred to as insurance bad faith.

Under Oklahoma law, insurance bad faith is “an independent tort upon which an insurer could be held liable for both compensatory and punitive damages for the delay or denial in payment of a claim not reasonably in dispute.” Additionally, the insurance company must “deal fairly and act in good faith with its insured” in order to not be found guilty of bad faith. If found guilty of insurance bad faith, the insurer must compensate the insured for financial losses, embarrassment, and loss of reputation, and emotional distress.

While there are many ways in which an insurance company can be found guilty of bad faith proceedings, the following are the most common tactics used to get out paying a settlement:

  1. Failure to Conduct an Adequate Investigation.

Without adequate evidence to support the insured’s claim, there are no grounds for the claim at all, right? Wrong. Too often, insurance companies either delay an investigation into an accident or fail to perform one at all until all evidence has essentially disappeared. Doing this will not help them, but rather, raise questions as to the morality of their company.

  1. Misinterpreting the Law or Policy Language.

Both the law and policy language are purposely confusing so as to leave room for interpretation. However, there is only so much room for interpretation allowed in an insurance contract. If the courts discover that a company was purposely vague, they could be held liable for bad faith. Insurance companies have a duty to their policyholders, to be honest, and truthful in their statements and policies.

  1. Offering an Inadequate Settlement.

Though not paying a claim at all is a common bad faith tactic, a more common one is offering a lowball settlement. This is because claimants might complain about a low settlement, but they won’t report it, as they will trust that that is what their claim was worth. However, offering no settlement raises suspicion and is often times harder for insurance companies to explain.

For additional signs of bad faith, read our article, 5 Signs of Bad Faith.

Work With an Oklahoma Insurance Bad Faith Attorney

If you suspect that your insurance company has utilized one of the above bad faith tactics, do not wait too long to take legal action. Speak with an Oklahoma insurance bad faith lawyer at The Bennett Law Firm today regarding your claim. With a knowledgeable lawyer on your side, you can prove bad faith and not only be compensated fairly for your original claim but also be compensated for your hassle of having to deal with a bad faith claim. Call our office at 405-272-0303, or contact us online, to schedule your free consultation today.