Storm Season Creates Legal Issues with Insurance
It’s spring in Oklahoma and the weather this week has quickly reminded me that storm season is here.
Storm season brings with it the same old questions: Will I be able to get the cars in the garage when it hails? Will my roof make it through another year? Should I finally break down and install that storm shelter? Do I have enough insurance on my home and cars? What will I do if I lose everything?
These are the deep questions I think about when my weatherman of choice tells me to take cover.
Insurance is one of those things that we all know that we have to have but we often don’t think about why we have to have it or if we have the right kind. I often am told by my clients things like “I have full coverage” when the car is damaged or “my homeowners policy covers that” when in fact the client does not have the kind of insurance they believe or the insurance doesn’t do what they believe it does.
Insurance is something that we buy just in case, and we take for granted that the funds will be readily paid when call on the companies to pay it. This rarely happens in my experience.
When you purchase insurance it is called first party insurance. Under the law this creates certain obligations to you as the policyholder. The first obligation is to deal with you in good faith. The second obligation is to pay the claim when presented. If you make a claim on your insurance then your adjuster should not dicker with you on resolving the claim.
Unfortunately, many first-party insurance companies do this anyway.
Title 36 in the Oklahoma Statutes governs insurance claims and practices.
Following that statute will allow you to review the law in Oklahoma applicable to insurance and insurance claims. The Unfair Claims Settlement Practices Act is found at 36 O.S. §1250 et seq. In particular 36 OS §1250.5 lists the claims adjusters duties and what constitute unfair claims settlement practices. These include:
“1. Failing to fully disclose to first party claimants, benefits, coverages, or other provisions of any insurance policy or insurance contract when the benefits, coverages or other provisions are pertinent to a claim;
2. Knowingly misrepresenting to claimants pertinent facts or policy provisions relating to coverages at issue;
3. Failing to adopt and implement reasonable standards for prompt investigations of claims arising under its insurance policies or insurance contracts;
4. Not attempting in good faith to effectuate prompt, fair and equitable settlement of claims submitted in which liability has become reasonably clear; …..
6. Denying a claim for failure to exhibit the property without proof of demand and unfounded refusal by a claimant to do so;….
8. Requesting a claimant to sign a release that extends beyond the subject matter that gave rise to the claim payment;
9. Issuing checks or drafts in partial settlement of a loss or claim under a specified coverage which contain language releasing an insurer or its insured from its total liability;
10. Denying payment to a claimant on the grounds that services, procedures, or supplies provided by a treating physician or a hospital were not medically necessary….”
These are just a few of the violations that can result in an insurer from being sued for failure to properly pay a claim.
In personal injury claims we see item 10 happening quite often. When insurance companies fail to abide by the Unfair Claims Settlement Practices Act they can be subject for a bad faith lawsuit.
Bad faith is a tort and under the law you can sue for it in addition to a breach of contract claim for their failure to pay the amounts due under the policy. To some this can look like a double recovery on the same claim, but the insurance company owes you the duty to pay the claim and the duty to deal with you fairly. These are separate duties and they are separately compensable.
They also have different statutes of limitations. It’s important when choosing your lawyer to help you fight an insurance company that you not only choose someone who understands your injuries but that also understands insurance law.
This article was originally published in the Yukon Progress on May 3, 2019.