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Oklahoma’s Duty To Adjust Insurance Claims Fairly And In Good Faith

Posted in Bad Faith

Experienced insurance adjusters know the phrase “bad faith”. The term is a short hand way to describe a lawsuit filed for the alleged violation of the implied duty of good faith and fair dealing. It is the legal duty imposed by operation of law. The shorthand “bad faith” is a lot easier to say.

The implied duty sounds like one duty. But, the obligation carries two parts; good faith and fair dealing. The two parts combine into a fluid concept to form the basis for the proper adjustment of a claim.

Good faith and fair dealing involves subjective honesty combined with the objective reasonableness of the actions by the insurer. The central focus is on the information known to the insurance company at the time of the claim. The Oklahoma courts seem fond of the phrase “at the time performance was requested”. The phrase is really just a different way of saying information known while the claim was being adjusted.

It is important to observe the courts can also focus on information not known, but that could have been reasonably discovered. In investigating a claim, adjusters need to ask questions. Ignorance of the facts is not a defense if the information could have been learned with reasonable effort.

Therefore, an insurance company’s knowledge during the claim is the focal point. If the insurer had a good faith belief, then the courts will not hold the insurance company responsible for bad faith. No insurer is held to the standard of perfection.

The courts expect to see a good faith belief and an honest intention. The person suing for bad faith has the burden of proof. A bad faith claim can be successfully fought off by the insurer affirmatively showing that good faith and fair dealing were used during the claim.

Claims of bad faith should be reviewed with knowledgeable, experienced Oklahoma legal counsel. The bad faith law has been evolving for the past 30 years. It pays to have an attorney familiar with the nuances and fine details of the ever changing dynamics.

Steven V. Buckman has been engaged in bad faith litigation for over 33 years. Give him a call if you have questions!

Oklahoma Bad Faith Law Applies To Hail, Storms, Tornado, Theft, Ice, Fire, Water Damage, Etc.

Posted in Bad Faith

   

Insurance covers all kinds of damaging events. Many people think about their home, car, boat, lake house, disability policy, life insurance, or business. However, insurance is available for all sorts of other things.

For instance, professional athletes insure their hands. Entertainers and music stars insure the ability to sing or play an instrument. Actors and actresses buy insurance against disfigurement. Doctors buy malpractice coverage. Rodeo and concert events are insured against weather cancellation. Farmers purchase crop insurance while ranchers obtain coverage for their hay and livestock. Racing syndicates buy all kinds of insurance for valuable race horses. The list goes on and on.

Bad faith law in Oklahoma applies to virtually every kind of insurance written. Insurers adjusting claims need to be cautious in paying for losses. The failure to follow the rules can be expensive!

Although Oklahoma bad faith law does not apply to every type of insurance, it applies to most insurance claims. Prudence in finding experienced counsel early in the claim is a must. Delays in hiring a knowledgeable attorney creates problems.

If you have questions about adjusting practices and bad faith, give us a call!

Bad Faith Must Be Proven With Evidence Per Oklahoma Law

Posted in Bad Faith

For the filing fee of approximately $250, anyone can file a bad faith lawsuit. Just saying an insurance company acted in bad faith is not proof. Words are easy to say. Some people jump to the conclusion that there is bad faith when there isn’t any. There is a significant difference in filing papers at the courthouse and actually winning a trial. Filing a bad faith lawsuit means writing words on a legal document. Proving bad faith in a trial means providing evidence to the court of the bad faith.

In order to prove bad faith there must be admissible evidence. Not all evidence is admissible. For example, hearsay evidence is not generally allowed in court. As another example, evidence that is not relevant is excluded from trial. Judges look at the information you want to give the jury, then make legal decisions about the admissibility.

To prove bad faith, the person who sued typically must have evidence to show:

  1. the insurance company was required to pay a claim under the insurance policy,
  2. the insurer unreasonably refused to pay the claim,
  3. the company did not deal fairly and in good faith, and
  4. the actions caused injuries or damages.

The evidence will nearly always be reviewed by a judge before there is a trial. It is common for the insurer to file a motion for summary judgment. The motion asks the court to rule no bad faith exists. If the policyholder cannot convince the court ample evidence is present, then the bad faith claim will be dismissed.

If the court finds there is a minimum amount of evidence, then the case will go to trial. The jury will only be given the admissible evidence. After the witnesses testify and exhibits are admitted, the jury will decide if bad faith occurred.

Bad faith lawsuits tend to be highly charged and contentious. The decision by the judge in granting summary judgment and/or the jury’s decision may not be the final step. It is normal to see appeals of the decision.

On appeal, the appellate judges look at the facts to see if there is really bad faith. Even if a jury says the actions were bad faith, the appellate courts may disagree. The judges hearing the appeals have the final authority to decide what is or is not bad faith.

In Oklahoma it takes a lot more than filing a lawsuit for there to be bad faith. Without proper evidence, the bad faith lawsuit is going to be dismissed before trial. This area of law is best suited for experienced legal counsel familiar with the rules and applicable law.

Bad Faith in Oklahoma Is Truly Bad Conduct

Posted in Bad Faith

Bad faith is when the insurance company wrongfully refuses to pay a valid insurance claim. It is not a simple mistake during the claim. It is not a genuine dispute over the coverage or damages. Bad faith isn’t present just because the claimant wants more money.

The courts in Oklahoma (and courts in other states) have identified misconduct that is bad faith. Although not a complete list, actions declared to be bad faith include:

* lying to the policyholder about the available coverage

* deliberately refusing to pay a valid claim

* not acting promptly in the payment of a claim

* intentionally offering lowball amounts rather than a reasonable figure

* forcing the policyholder to needlessly file a lawsuit

* ignoring established legal precedents of the courts concerning the insurance coverage

* refusing to follow the established insurance laws

* attempting to cheat or defraud the policyholder

* using the desperate circumstances of the policyholder as leverage to pay less than the amount really owed

* unreasonably failing to keep the policyholder informed about the claim

* blindly ignoring the true facts in order to not pay a claim

* fraudulent actions by the company or its adjuster to keep from paying a claim

* committing crimes so as to not pay a legitimate claim

* telling the policyholder the time to file suit has run out when the time has not expired

The list is not exhaustive. However, it is easy to see a pattern of the type of prohibited actions. The courts view wrongful and unreasonable actions as bad faith. The courts do not see an ordinary mistake or simple negligence as bad faith. An insurance company is not required to be perfect. Insurers are required to treat the policyholder reasonably, fairly, and in good faith.

If you have questions about bad faith in Oklahoma, give us a call 918-940-2222.

Oklahoma Bad Faith Law – Protecting The Public

Posted in Bad Faith

Bad faith law is intended to protect the public from unscrupulous claim practices. The courts apply the common law precepts of good faith and fair dealing to fashion remedies. The laws balance the unequal bargaining position of the parties.

An insurance company has the greater financial resources and usually a lot more sophistication in claims. The insured policyholder may be in a poor financial position at the time of a loss. Due to the imbalance, the courts require the insurer to act in good faith in paying claims.

The public extends to homeowners, businesses, families, and even other insurers. Generally, the law is aimed at making sure insurance claims are promptly paid. If an insurance company acts in bad faith, then damages can be awarded.

The damages must be proven. There must be evidence of actual harm to recover for bad faith. There does not have to be bad faith to collect the benefits due under the insurance policy. The policy coverages are based upon contract law. Bad faith is a separate matter distinct from the coverage purchased.

In addition to compensatory damages, in certain circumstances the courts will allow punitive damages. These damages are sometimes called exemplary damages. An award of punitive or exemplary damages is to punish any misconduct. The damages are intended to deter similar future conduct.

Punitive damages must also be proven. It is not enough to just make a demand for them. Without evidence, the courts are not going to let punitive damages be awarded. The time and place for exemplary damages is for particular situations.

In a bad faith case, the person filing suit will usually ask for the coverage purchased, compensatory damages for bad faith, and sometimes punitive damages. If successful in the lawsuit, there will likely be a follow up request for attorney fees and costs. The issue of attorney fees is normally a second stage after a trial. Attorney fees can only be awarded if the person proves the case and prevails at trial.

 

Oklahoma Bad Faith – NOT!

Posted in Bad Faith

Bad faith under Oklahoma law only applies in certain situations. Not every dissatisfied claimant is entitled to sue. Bad faith is:

* not action by the underwriting department while underwriting a policy

* not the activity of an insurance agent in selling the coverage

* not the action of an adjuster handling a third party claim

* not just because some lawyer uses the phrase “bad faith”

* not an honest mistake by the claim department or adjuster

* not simply paying less than an amount that makes the claimant happy

* not the use of litigation to resolve disputed facts and circumstances

* not litigation of novel and unsettled points of law including matters of first impression

It always makes sense to involve an experienced attorney early in the claim if issues of bad faith may be present.

Oklahoma Bad Faith – What Is It?

Posted in Uncategorized

In Oklahoma, an insurance company has a legal duty to fairly pay claims. This duty is technically to act in good faith and with fair dealing. An insurance company that refuses to fairly pay claims can be sued for bad faith for not complying with the law. The insured policyholder can claim emotional distress, financial losses, etc., caused by the bad faith.

It is good to keep in mind that the term bad faith is a short hand version of the duty of good faith and fair dealing. Most adjusters and insurers use “bad faith” to describe this type of litigation. In everyday communication, saying breach of the implied duty of good faith and fair dealing is a mouthful. Bad faith is a whole lot shorter and easier to say.

The concept of bad faith is to keep insurance companies promptly paying the amount owed. Historically, there have been a few disreputable insurers who tried to take advantage of certain situations to avoid paying claims. Like every industry, there are always a few bad actors. On the whole, the vast majority of insurance companies pay their claims timely and appropriately.

In some respects the bad faith law protects honest insurance companies, not just the policyholder. The law acts as a shield to the good companies. Imagine how hard it would be for an insurance company to compete against another company that takes advantage of people by not paying claims. The bad actor company would reap profits by not paying. In time, the good companies would be forced out of business.

Not all Oklahoma lawyers understand bad faith law. We have seen a lot of attorneys who threatened to sue for bad faith that did not exist. Some actually sued and wasted a lot of time and money. Just because an insurance company doesn’t pay the amount the insured wants does not make it bad faith.

Just like all litigation, bad faith requires proof. Lawyers without experience in insurance may reach the wrong conclusion. The lawsuit is filed. Years later the court rules there’s not bad faith. Having sound knowledge about insurance coverage is a must. It is rare to see a successful bad faith lawsuit unless there is first coverage for the loss. There are very few exceptions.

Trained adjusters can spot an inexperienced attorney a mile away. One easy way is the misuse of common terms in the industry. Adjusters speak a language using words that have precise meaning to the claim industry. Lawyers who don’t speak the language stand out. In one or two conversations, it is apparent the lawyer doesn’t really know what he is talking about.

For example, the attorney may talk about a bad faith claim hoping to scare the adjuster. It doesn’t work. An experienced adjuster knows how to do their job. The lawyer’s threats of bad faith just illustrate how little the attorney really knows. Once the lack of experience is revealed, the attorney loses a lot of credibility.

In conclusion, bad faith is a separate right to sue, but only if the insurance company wrongfully adjusts the claim. The legal right to recover money for bad faith is not based upon mere conclusions. Evidence is necessary of the bad faith acts. If the bad faith causes financial loss, emotional distress, etc., damages can be awarded. In severe cases, punitive damages can be given.

Oklahoma’s New Insurance Business Transfer Law

Posted in Uncategorized

A forum on Oklahoma Business Transfers was conducted in Tulsa, Oklahoma on August 21, 2018. The conference provided speakers from the insurance industry with expertise in business transfer and runoff business.

The discussion was interesting as the panel discussion explained the comparison to the new Oklahoma legislation effective in November, 2018, with the structure in the Part VII transfer familiar to the London insurance market. The Oklahoma model was implemented in an attempt to emulate Part VII.

Members of the legal team of the Oklahoma Insurance Department along with the Commissioner spoke about the history of the legislation and the guidance the insurance department is providing to insurers wanting to make use of the new law. Obviously supportive of the new transfer law, the insurance department is working to assist insurers who wish to transfer business with the intended result of legal finality.

Time will tell how the industry reacts to the new transfer act and the courts’ approach to the process.

Using Appraisal To Settle Oklahoma Insurance Claims

Posted in Damages, Homeowners' Insurance

The typical homeowner’s insurance policy has a clause allowing the parties to use appraisal to resolve disputes. Appraisal is intended to quickly and economically determine the amount of a loss in cases of disagreement. Like many aspects of Oklahoma law, appraisal should be approached with the advice of an experienced attorney. The Oklahoma appellate decisions impact the process.

In simple terms, appraisal involves three parties that serve as a panel. Each side chooses one appraiser to act as a disinterested appraiser. The two appraisers choose the third person by agreement. The third individual is called the Umpire. If the two appraisers are not able to pick the Umpire by agreement, then either side can ask the court to select the Umpire.

The intended result is a decision as to the amount due and a closed file. Appraisal can be an efficient, fair means to settle a disagreement. When appraisal is requested by parties who do not know the law, it can end most unpleasantly. Some insurers and some policyholders have the DIY or “Do It Yourself” approach to problems, preferring to avoid lawyers and fees. In our experience, the DIY thinking is a good way to end up very, very unhappy.

The problem is that appraisal on the surface looks to be something that might avoid lawyers and legal fees. The reality is that appraisal gone wrong can be quite expensive.

In certain situations, appraisal is a wonderful tool. It just has to be done the right way.

The insurance claim process seems to go through cycles. We see periods where appraisal is requested on claims, then we don’t see appraisal used for quite awhile.

If we can assist you with an insurance claim or an appraisal, please let us know.

Good News In 2018 For Tornado Damage In Oklahoma

Posted in Homeowners' Insurance, Property Insurance, Storm Damage

Tornadoes cause so much destruction and damage to property in Oklahoma. So far, 2018 is a notable exception to the number of tornadoes and the extent of the damages. The National Weather Service reports there have been 18 tornadoes this year; the strongest being an EF2 and only one reported with this wind speed and strength.

This is great news for Oklahoma property owners and insurers. Property damage by tornadoes costs insurance companies a lot of money in claims.

Hopefully the lack of damages and claims will give everyone a bit of a financial break for 2018.

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