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!