Individuals and businesses are required, for various reasons to purchase insurance to guard against potentially devastating financial losses. Policy holders, or insureds, pay their bill faithfully each month or each quarter and they sleep easy at night knowing that they have insurance coverage.
Insurance companies are essentially playing a numbers game. They are in the business of insuring the losses that their clients suffer. Sometimes, when they are too focused on keeping their bottom line as robust as possible, they deny claims and mistreat their customers. Some even say insurance is a license to steal. When an insurance company delays paying a claim, denies a claim and causes a hardship for their customer, this is referred to as insurance bad faith. When an insurance company refuses to honor an insured’s claim, the insured may take legal action against the insurance company in order to obtain the compensation they deserve for their losses that should have been covered by their insurance policy.
According to an article in the Oklahoma Bar Journal, in 1977 the Oklahoma Supreme Court established bad faith as an independent tort upon which an insurance company could be held liable for both compensatory and punitive damages for the delay or denial of a claim not reasonably in dispute. Insurance companies owe a duty to their customers to act in good faith. Basically, the law requires that in exchange for an insured’s payment of premiums, an insurance company is required by law to hold up their end of the bargain, to treat their insureds’ interests with equal regard to their own, and to give their insured the benefit of the doubt. When an insurance company fails to act in good faith, they leave themselves open to a lawsuit, which can and should lead to the insurance carrier paying far more than the value of the underlying loss.
Compensatory damages in an insurance bad faith lawsuit
Compensatory damages are the financial losses suffered by the insured up to the value of the policy, i.e., the “policy limit” that an insured had when the insurance company did not honor its financial obligation to the insured. Compensation for the significant emotional distress that the insured was forced to endure as they contemplated financial ruin might also be included in compensatory damages. Further, an insured is entitled to consequential damages if the insured sustained other losses, such as lost income, loss of the value of an investment, etc., due to the failure of the insurance company to meets its contractual obligations under the policy.
The concept of punitive damages is built into our system of civil justice. They are designed specifically to punish to illegal behavior and deter others from engaging in similar behavior in the future. If it were not for the prospect of punitive damages, some less-than-scrupulous insurers might not feel compelled to honor their financial obligations to their customers.
As soon as you believe that a dispute is emerging between you and your insurance company, you might open up the policy and your eyes will glaze over because you realize that you have no idea what the language in your policy means. That is the time when you call a McAlester bad faith insurance attorney and schedule a consultation to discuss your case. In most cases, you pay nothing out of pocket because you can make a contingency fee arrangement with the lawyer, which means that they will receive payment for their services from whatever proceeds they can recover on your behalf. Contact or call the Stipe Law Firm at (918) 505-7741 to schedule a consultation today. We proudly serve clients throughout Southeast Oklahoma.