Both parties — you and your insurer — must uphold the agreement spelled out in your policy. The insurance company is obligated to pay all authentic claims on your policy, and you are obligated to pay the premiums when due.

Your insurance company is required by law to act in good faith when you file a claim by evaluating, investigating, processing, and paying legitimate claims.

Insurance Bad Faith occurs when:

  • Claims are not paid on a timely basis
  • Legitimate claims are denied
  • Covered claims are under-evaluated and underpaid

Unfortunately, most insurance companies go to great lengths to reduce or eliminate their liability for insurance claims.

Since insurance companies are in a position of trust, the law in Oklahoma holds these companies to a greater standard, regardless of whether the company is located in Oklahoma.

Typically, our clients have been able to recover claim amounts in excess of what it was initially worth, once we have demonstrated that an insurance company has acted in bad faith.

In January 2008, the Florida Office of Insurance Regulation suspended Allstate Insurance from issuing new policies to any customers until it complied with a subpoena for a confidential report from a New York consulting firm, McKinsey & Co. The report helped Allstate redesign its claim-handling process in the 1990s.

According to regulators, Allstate restructured the method to boost revenue by reducing payments on claims without considering the merit of the claim, and then taking policyholders to court when they asked for more money. This strategy has been described as “Deny, Delay, Defend.”

Allstate was punished for its actions in Florida, but the people of Oklahoma also were affected, and not only by Allstate. A number of insurance companies received reports from the same firm, and redesigned their claims process the same way. As a result, insurance companies in Oklahoma are reporting record earnings while many policyholders are left without the money that their insurance company is supposed to provide.

Insurance companies do reject claims for legitimate reasons, but more often than not, they are trying to cut costs and increase profits.

If your claim has been denied, your payments delayed, or you have not been paid your claim’s value, it is likely that you have a case of insurance bad faith.

Know Your Rights

Insurance companies must treat you in a manner that amounts to good faith and fair dealing, per Oklahoma law. This behavior is not optional—it is absolutely required. Insurance company behavior that is likely the result of bad faith includes, but is not limited to, the following:

  • The insurance company tells you that your policy means something other than what it seems to say.
  • The insurance carrier offers you a quick settlement for an amount equal to or below your medical expenses.
  • Your insurance company seems to be looking for an excuse to not pay for injuries or damages that are covered in your policy.
  • The insurance company is vague about what provisions do or do not apply in your case.
  • The insurance company is extremely slow to respond to a routine claim, such as a car accident or property damage.

If your insurance company is acting in bad faith, you need an attorney to handle this very complicated area of law.

Good Faith and Fair Dealing Standards

It is imperative to comprehend the expectations placed by Oklahoma law on your insurance company. The law makes it clear what constitutes unacceptable, illegal behavior:

  • Failing to pay the benefits that the insurance company knows you are entitled to.
  • Failing to properly investigate your claim for benefits.
  • Failing to properly evaluate the investigation that was done on your claim for benefits.
  • Intentionally and recklessly misapplying the provisions of an insurance policy.
  • Withholding payment of benefits from you knowing that your claim for is valid.
  • Refusing to honor your claim without a legitimate, arguable reason, and wholly lacking any evidence or support for its refusal.
  •  Failing to attempt to act in good faith to effect a prompt, fair settlement of your claim.
  • Unreasonably delaying payment of some benefits and denying your claim for some benefits.
  • Refusing to pay your claim for reasons contrary to the express provisions of the law.
  • The insurance company uses its unequal wealth and bargaining position to overwhelm and take advantage of you, and to effect an economic gain for itself by not paying an amount owed as stipulated by the insurance contract.
  • Failing to adopt and implement reasonable standards for the prompt investigation and handling of your claims.

Homeowner’s Insurance

If you own a home, you probably trust homeowner’s insurance to cover your losses and help you rebuild if your home were damaged or demolished by tornadoes, hurricanes, or other “Acts of God.” Damage claims from these incidents should raise few questions, but insurance companies often try to deny or underpay storm damage claims.

Before Hurricane Katrina, insurance company strategies and efforts received very little publicity when denying valid claims. Policyholders assumed their coverage was sufficient and that insurance would pay for storm damage. But in practice, insurance companies use numerous tactics to avoid paying.

Denying Claims

An insurance company may try to deny your claim by claiming that either some element of the cause of damage is not covered by your policy or that the damage was not caused entirely by the storm. For example, storms may cause water destruction, which should be covered by your homeowner’s insurance, but the insurance company may try to claim that the water damage is due to subsequent flooding, which would not be covered by homeowner’s insurance (but by an unconnected flood policy).

Offering Less Than You Deserve

Rather than denying your claim, insurance companies may offer you less than you deserve, hoping to avoid a dispute. They may offer to pay for part, but not all, of the destruction.

Delaying Claims

When insurance companies delay payment, they begin collecting interest on the money they owe you. Even if they ultimately pay, they have gained from your waiting: They save money while your expenses increase. Your property may sustain further damage, like mold and continuing weather harm, due to delayed repairs. Insurance companies know that if they hold out, you are likely to become desperate to receive your money and accept a lower offer.

When an insurance company denies your claim or offers to pay too little, you can dispute its decision. In order to do this effectively, you need to be prepared:

  • Take pictures of all damage.
  • Take notes, including everything that has happened since the damage occurred. Dates, times, conversations with the insurance company, and the results of those conversations should all be documented.
  • Keep receipts for everything financial. This includes living expenses—hotel bills and eating out—while you are waiting for your home to be habitable again. Also keep receipts for repairs that you pay out of pocket and any other money that you spend due to the damage to your home and the delaying of your claim.
  • Talk to a contractor and get an appraisal for repairs on your home. Do not rely on your insurance company’s estimate.
  • If the insurance company denies your claim, insist on receiving full information in writing, including the exact wording in your policy that figured into the denial of your claim. This is to keep the insurance company from changing its story and helps you understand exactly what you’re up against.

Smolen Law will evaluate your claim for free, representing you on a contingent-fee basis (meaning we do not get paid until you recover your claim).

More Information


Smolen Law’s mission is to provide exceptional legal services with integrity, professionalism and respect. Choose the Oklahoma law firm that gets results—Smolen Law.



No recovery, no fee.
(But let’s be honest, that rarely happens.)

Smolen Law
Smolen Law - The Alpha Firm
Donald E. Smolen, II
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Laura L. Hamilton
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