When you buy insurance, you’re buying protection for your personal finances and peace of mind knowing that your insurer will provide coverage.
But when an insurance company deliberately denies a legitimate claim, it can be shocking, not to mention expensive. When insurance companies deny a legitimate claim, that’s called insurance bad faith.
However, you don’t have to accept an unjust insurance denial. You can file a claim against your insurance company. To do so, it’s important to know the difference between legitimate insurance denial and insurance bad faith.
If you’re an Oklahoma resident and suspect your insurer is acting in bad faith, call Carr & Carr Attorneys at Law at (405) 691-1600 to set up a free consultation.
What is insurance denial?
When you are prescribed treatment, medicine, or a particular service by a healthcare physician, it’s easy to assume that your health insurance will cover it. After all, health insurance is meant to protect your personal finances from the high costs of medical care.
However, that’s not always the case with insurers. Your insurance company can deny covering your treatment, medicine or service, leaving you with the burden of paying the full cost.
This situation arises with many different insurance policies, not just medical. Claim denial can also happen with your car, disability, home, and any other insurance policy you may have.
There’s a difference between reasonable claim denial and insurance bad faith, which we explore below.
What are common reasons for insurance denial?
Insurance companies must have a specific reason for denying your claim. That reason often depends on the insurance coverage you have.
Healthcare insurance denial
When your insurer notifies you of your insurance denial, their reason will come from a document called an Explanation of Benefits (EOB). Common reasons for healthcare claim denial include:
- “Not medically necessary.” The treatment or service prescribed by your doctor is “medically necessary” if it falls within generally accepted standards of medical care for an injury, illness, or condition.
- “Experimental or investigational.” If your insurer claims that your care is experimental, you may be able to seek coverage if you can prove that it’s medically necessary, less expensive than the standard treatment, or the only treatment that will work.
- “Out-of-network.” In-network doctors, hospitals, clinics, and other facilities have a contract with your health insurance company. When you choose an in-network provider, you pay less. If you received care from a provider out-of-network, you’ll be responsible for some or all of the costs.
- “Coverage has lapsed.” Your insurance information on file with your doctor may be outdated, which means they didn’t submit to the correct company, and they’ll need to resubmit it. If you’re unsure why your coverage has lapsed, you’ll need to call your insurance company to find out.
Auto insurance denial
Your auto insurance policy has limits. When you purchase auto insurance, you choose what type and the extent of coverage you like. If your claim exceeds your coverage limits, your auto insurance company can deny your claim.
Another reason for auto insurance denial is violating the law. If you were driving while impaired or intoxicated and got into an accident, your insurer may deny your claim.
They may also deny your claim if you were driving without valid auto insurance or driving without a license, both of which are illegal.
Homeowner insurance denial
What about homeowner’s insurance?
There are many reasons homeowner insurance claims get denied. If you take too long to file a claim, or if you don’t supply enough information in your claim, there’s a higher risk of your claim getting denied. It’s your responsibility as the homeowner to file claims properly and on time.
Even if you submit a complete claim within the allotted time frame, your insurance company may still deny it.
Many homeowner’s insurance policies exclude damage from earthquakes, floods, or other weather, for example. Or, if your home suffers from damage due to poor maintenance, or as a result of normal wear-and-tear, your insurer will likely not be obligated to cover it.
In addition to giving a reason for insurance denial, insurance companies must also offer a process to appeal their decision. You can ask your insurance company to review their decision fairly, but their initial ruling may still stand.
If the claim is valid and does not fall under a “reasonable denial,” this is where insured individuals may start to consider an insurance bad faith claim.
What is insurance bad faith?
As you can see, insurance companies are required to be fair and transparent about their decisions. When they’re not, their behavior can be called “insurance bad faith.”
Insurance bad faith means an insurance company has failed to fulfill their obligations to their policyholders, whether it’s refusing to provide coverage for a legitimate claim or processing a claim in a timely manner.
Bad faith insurance isn’t limited to health insurance, either; it can apply to any type of insurance policy, like auto insurance, life insurance, or homeowners’ insurance.
What are examples of insurance bad faith?
Insurance bad faith can encompass different wrongful actions by an insurance company.
Examples of insurers acting in bad faith include:
- Misrepresenting the contract terms and language to avoid paying claims
- Refusing to explain or provide reasonable support for denial
- Failing to promptly reply to a policyholder’s claim
- Denying payment on a covered claim
Insurance bad faith is different from a legitimate insurance denial. An insurance company can deny your claim if they have a legitimate reason, can provide evidence for that reason, and share an explanation of the appeals process with you.
Acting in bad faith means an insurer is being negligent, unfair, evasive, or even malicious. They’re ignoring or failing to uphold their contractual obligation to you, the policyholder.
What should I do if I suspect insurance bad faith?
If you suspect you’re a victim of insurance bad faith, you may file a bad faith claim to recover financial compensation or damages. What’s considered “bad faith” can vary from state to state, which can make it difficult to file a claim.
To file a bad faith claim in Oklahoma, for example, you must prove that you were:
- Covered under the insurance policy
- The actions of the insurer were unreasonable under the circumstances
- The insurer failed to deal fairly and act in good faith
- The breach or violation of good faith and fair dealing was the direct cause of your damages.
In addition, you’ll need to decide whether to file in state or federal court, what compensation to seek, and so on.
The bad faith claims process can be intimidating and complicated, which is why it’s best to contact an experienced attorney to help.
Our insurance bad faith attorneys in Oklahoma can help
If you believe you have a bad insurance claim in the state of Oklahoma, call (405) 691-1600 to speak to the insurance bad faith lawyers at Carr & Carr Attorneys at Law. You may also fill out an online form to set up a free consultation, and follow our Facebook page for updates and news resources.
The insurance bad faith attorneys at Carr & Carr can help you stand up to an insurance company and fight for the compensation you deserve.