No one really enjoys paying for insurance; it’s not one of those things you get a really good feeling about when you’re handing over your hard-earned money. What’s more, it’s one of those things you absolutely have to buy, but hope you’ll never use.
When bad things happen and you need to call upon your insurance company to pay for the damage that you’re sure is covered under your policy, what happens if the insurance company comes up with a reason not to do so? Well, if those reasons are bogus—and these things happen all the time—the insurance company could end up facing what is known as an Oregon bad faith claim.
First and foremost, an insurance policy is a contract
Here’s the deal, or at least here’s what the deal should be if everyone is living up to their part. You hand over your money in the form of premiums, and the insurance company agrees to cover the cost (up to specified limits) if an event covered under the insurance policy occurs.
This is, in its simplest forms, a contract between you and the insurance company, and if an insurer fails to act properly under the terms of the contract, the person paying the premiums may have very good grounds for a bad faith claim.
Defining what is and isn’t bad faith is somewhat more complex, because insurance companies do have certain rights which allow them to question and investigate claims. The literal translation of bad faith is:
- An intentionally dishonest act of not fulfilling a contractual obligation
- Misleading another by entering into an agreement without the intention or means to fulfill that agreement
- Violating basic standards of honesty in dealing with another
Oregon recognizes what is called “implied covenant of good faith and fair dealing,” which assumes that both parties in a contract will uphold their end of the bargain. When one of the parties doesn’t, that covenant is deemed to have been breached (as in breach of contract) and a bad faith claim can then be made against the offending party.
Bad faith claims against insurance companies are on the rise. The pressure to keep stockholders happy and to keep profits up seems to be pushing insurance companies into behavior that could certainly fall under the category of not dealing honestly with claimants.
Acting in bad faith is a risky business
When insurance company behavior leads to a bad faith claim, the results for the insurer can be massive in terms of damages. Oregon, like most other states, allows a court to punish acts of bad faith by insurance companies with punitive damages. Multi-million dollar awards can and have been made against insurance companies who acted in bad faith.
Obviously, insurance companies will deny with their last breath that they would ever act in bad faith. When pressed, they can also roll out a formidable team of attorneys to argue their corner (and save them millions in the process). Anyone considering making a bad faith claim against an insurance company would therefore be very wise to acquire the services of an attorney with experience in dealing with such cases.
Certain types of Oregon bad faith acts
Beyond the legal definition of what represents an act of bad faith by an insurance company, many people are confused as to what represents such an act. Where insurers are concerned, acts of bad faith come in several forms, because insurance companies have a variety of duties to their customers.
Because the nature of insurance cover can be extremely complex, insurance companies clearly feel there are ample gray areas in which they can engage in activities that others can and do see as acts of bad faith. First, there’s the question of whether the claim is a “first party” or a “third party” claim.
Your average, everyday first party context would be one in which an insurance company sells a policy to cover property like a house or a car that then becomes damaged. Acts of bad faith here can include:
- A failure to properly investigate the damage
- A failure to determine whether or not the damage is even covered under the policy
- Giving an unrealistic assessment and valuation of the damage that has been done, and which the insurance policy covers
- A point blank refusal by the insurance company to acknowledge the claim or admit liability, even when the terms of the policy clearly indicate cover should be provided
When it comes to third party claims, insurance companies have a very distinct duty which they frequently fail to fulfill. They must, by law, defend a claim or lawsuit in its entirety, even if only a portion of the claim being made applies to the insurance policy.
- Insurers must cover all defense costs, unless the policy specifically exempts them from this responsibility.
- The defense costs must also be covered in their entirety, regardless of the level of cover of the insurance policy. This can be very expensive for an insurance company, which is one of the reasons they will risk acting in bad faith by neglecting or refusing to defend the entire claim.
- Insurance companies must also, by law, defend the claims immediately, as well as meaningfully and completely. This tends to go against typical insurance company behavior, which frequently sees them delaying claims for as long as possible.
- The insurer also has a duty to pay any judgment against the policyholder, up to the limit of the coverage stipulated and paid for under the policy, as long as the judgment is for an act covered under the policy.
Many of the laws relating to bad faith claims are complex, which is possibly why insurance companies continually—even increasingly—engage in bad faith behavior. Anyone who complains to their insurer about acts of bad faith is likely to be given a long, technical explanation by a representative of the insurance company as to why their behavior is perfectly ethical, morally justifiable and utterly legal.
In cases like this—and they are happening every day—any Oregon citizen who firmly believes their insurance company is acting in bad faith should get an expert on their side. Portland accident attorneys with a history of dealing with insurance companies that are reluctant to do what’s right and fair, have no difficulty challenging bad faith behavior.
If you want to be treated fairly and honestly, and your insurance company is, in your opinion, in breach of their contract with you, phone a good Portland accident lawyer for a free consultation. They’ll be able to tell you very quickly if what you describe does warrant a bad faith claim, and if so, they will guide you through the entire process.