Prosecuting an Oklahoma Bad Faith Claim
This guide identifies the various issues and legal standards that often arise when prosecuting a bad faith insurance claim under Oklahoma law.
The Special Relationship Between an Insurer and an InsuredIn ordinary commercial contracts, a breach of that duty merely results in damages for breach of contract, not independent tort liability. Insurance contracts, however, are not ordinary commercial contracts. A 'special relationship' exists between an insurer and its insured stemming from the quasipublic nature of insurance, the unequal bargaining power between the insurer and insured, and the potential for an insurer to unscrupulously exert that power at a time when the insured is particularly vulnerable. This "special relationship" creates a nondelegable duty of good faith and fair dealing on the part of the insurer. Accordingly, an insurer's breach of this duty gives rise to a separate cause of action sounding in tort, nicknamed "bad faith."
The Elements of a Bad Faith ClaimThe essence of the tort of bad faith is an insurer failing to promptly pay a claim absent a reasonable belief that the claim is legally or factually insufficient. Accordingly, to prove a claim of breach of an insurer's duty of good faith and fair dealing, a plaintiff must prove the following elements: (1) the insurer was required under the insurance policy to pay the insured's claim; (2) the insurer's refusal to pay the claim in full was unreasonable under the circumstances because, for example, the insurer: (a) had no reasonable basis for the refusal; (b) did not perform a proper investigation of the claim; or (c) did not evaluate the results of the investigation properly; (3) the insurer did not deal fairly and in good faith with the insured; and (4) the insurer's violation of its duty of good faith and fair dealing was the direct cause of the injury sustained by the insured.