What Is Insurance Bad Faith, and Why Does Your Own Company Owe You More Than the Other Driver's?

4 days ago

3 min read

After a wreck there are usually two insurance companies in the picture: yours and the other driver's. People tend to treat them as the same animal. Oklahoma law does not, and the difference decides who you can hold to account when a claim gets slow-walked or lowballed.

The duty your own company owes you

An insurance policy is a contract, but it isn't an ordinary one. You pay premiums for years in exchange for a promise that the company will be there on the worst day, and when that day comes the company has the money and you have the bills. In 1977 the Oklahoma Supreme Court recognized that an insurer has an implied duty to deal fairly and in good faith with its own insured, and that violating the duty is a tort, a wrong separate from breaching the contract.

That matters because of what you can recover. A contract claim gets you the benefit the company should have paid in the first place. A bad faith claim can also reach the harm the delay or denial caused you, and punitive damages in a proper case.

What bad faith is not

A disagreement is not bad faith. An insurer is allowed to question a claim it has a reasonable basis to question, and taking a legitimate dispute to court is not bad faith either. A low offer alone doesn't prove it. The question is whether the company acted unreasonably in how it handled, and paid or didn't pay, what it owed.

What it looks like

In practice it tends to look like one of these.

Denying a claim without a real investigation, or without giving you a reason.
Sitting on a claim for months while asking for the same records again.
Offering far less than the company's own file shows the claim is worth.
Misstating what the policy says.
Making you file suit to get what is plainly owed.

Why the other driver's company doesn't owe you the same thing

The duty of good faith comes out of the insurance contract. You have no contract with the other driver's insurer, and the Oklahoma Supreme Court has held that an injured person who is a stranger to the policy cannot sue that company for bad faith over how it handles the claim. Its adjuster can lowball you, and your remedy is against the driver, in court.

That company does owe a duty of good faith to its own insured, the driver who hit you. It has to handle your claim against him as if it alone were liable for the whole amount, with his interests in mind. That is where an injured person's leverage comes from. When a well-documented demand to settle within the policy limits is refused without good reason and a jury later returns more than the limits, the company can end up answering to its own insured for the excess. Insurers know it, and it changes how a properly presented claim gets evaluated.

Where it comes up most

For injured people it comes up most often on uninsured motorist claims, where your own company is the one paying for what another driver did. The same duty applies to your homeowner's policy and to other insurance you bought.

If you think it is happening to you

Put everything in writing. Ask for the denial, and the policy language it rests on, in writing. Keep a log of every call and keep every letter. Ask for a complete copy of your policy. Bad faith claims generally have to be filed within two years, and your policy may have deadlines of its own, so don't wait on a company that isn't moving.

I handle injury cases on a contingency fee, so you pay no attorney fee unless we recover money for you. Call (918) 221-6190 or use the consultation form for a free consultation.

This article is general information, not legal advice. Every case turns on its own facts, and past results do not guarantee future outcomes.