What Constitutes Bad Faith By An Ohio Insurance Company?

Updated 02/04/2025 by David M. Chester, Ohio Personal Injury Lawyer

Understanding Ohio insurance bad faith starts with a fundamental principle: in Ohio, the law requires insurance companies to act in “good faith” when handling claims from their policyholders. This core principle of Ohio’s bad faith insurance law protects consumers from unfair treatment during the claims process.

Many times when the insurance company acts in bad faith, it involves claims for personal injuries, such as those incurred in car accidents, motorcycle accidents, or truck accidents. When dealing with Ohio car accident claims, it’s important to understand that under Ohio bad faith insurance law, the duty of good faith primarily applies to how insurance companies treat their own policyholders.

Understanding Ohio Car Accident Claims and Bad Faith

Most of the time when a claim is made for personal injuries, you are dealing with the at-fault party’s insurance company. The other party’s insurance company typically doesn’t owe you a duty of good faith in these situations. However, your own insurance carrier has specific obligations under Ohio law.

When Can You Make a Bad Faith Claim?

Understanding when you can pursue an Ohio insurance bad faith claim is crucial. It is only when a claim is made against your own insurance company that a separate claim for bad faith may be made. This most commonly occurs in situations where:

  1. A person makes a claim for uninsured or underinsured benefits under their own insurance policy (where the person who hit you either did not have insurance or had lower liability limits than your underinsured policy limits)
  2. You make a claim for medical payment benefits
  3. Your insurance company refuses to repair your car under your collision policy

The Reality of Ohio Insurance Claim Denials

This brings up a question I commonly hear when clients face Ohio insurance claim denial situations: why would a multibillion-dollar insurance company try to fight its insureds over a few thousand dollars on an insurance claim?

The answer, in my opinion, is that it is easier for an insurance company to save money by reducing payouts by a little on hundreds of thousands of claims than it is to not pay out on one legitimate large claim. Some insurance companies’ documents discuss saving money by reducing payouts on soft tissue personal injury cases, which account for up to 95 percent of all personal injury cases.

Legal Standards for Ohio Insurance Bad Faith

Under Ohio Revised Code ยง 3901.22, insurance companies are prohibited from engaging in unfair and deceptive practices. When handling Ohio car accident claims, the Ohio Department of Insurance has identified several specific actions that constitute bad faith, including:

  • Misrepresenting relevant facts or policy provisions
  • Failing to acknowledge claims promptly
  • Failing to implement reasonable standards for claim investigation
  • Refusing to pay claims without conducting a reasonable investigation
  • Failing to affirm or deny coverage within a reasonable time
  • Not attempting in good faith to effectuate prompt, fair, and equitable settlements

What Constitutes Bad Faith?

Understanding what constitutes Ohio insurance bad faith requires case-by-case evaluation. In its broadest sense, an insurance company acts in bad faith when it denies a claim or makes a nominal offer without providing any rational justification. The Ohio Supreme Court has established that bad faith exists when there is no “reasonable justification” for the insurance company’s actions.

Dealing With Ohio Insurance Claim Denial

If a successful claim for bad faith is proven, the insurance company can be forced to pay punitive damages in addition to the compensatory damages required for your injuries. These punitive damages are paid to the insured injured party and can be several times larger than the actual compensatory damages caused by the accident. In Zoppo v. Homestead Insurance Co. (1994), the court upheld a punitive damages award that was significantly larger than the underlying claim.

Protecting Your Rights

If you believe you’re facing an unfair Ohio insurance claim denial or your insurance company is delaying payment, an experienced Ohio personal injury lawyer can determine if you have a valid bad faith claim by comparing your case to other bad faith claims in your jurisdiction.

The key is to find out if the insurance company had a legitimate reason to reduce, deny, or delay your claim. Ohio courts have consistently held that the presence or absence of reasonable justification is the critical factor in these cases.

To help you determine if your insurance company has been acting in bad faith, you need an experienced Ohio personal injury lawyer such as the Chester Law Group. Call (419) 597-5558 or reach us online. We are here to help you understand your rights under Ohio bad faith insurance law and fight for the compensation you deserve.