What Constitutes Bad Faith By An Ohio Insurance Company?
In Ohio, the law requires insurance companies to act in “good faith” or fairly deal with their insurance policyholders when a claim is made.
Many times when the insurance company acts in bad faith it is in claims for personal injuries, such as those incurred in car accidents, motorcycle accidents, or truck accidents. Notice that the law only requires that the insurance company deal with their own policyholders in good 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 would not owe you a duty of good faith in these situations most of the time.
Bad Faith Claim
It is only when a claim is made against your own insurance company that a separate claim for bad faith may be made. This occurs mainly in situations where 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).
It can also apply when you make a claim for med pay benefits or your own insurance company will not repair your car under your collision policy. When a claim is made for uninsured or underinsured benefits in Ohio, your insurance company is required to act in good faith in negotiating with you for settlement.
This brings up a question I commonly hear when clients believe that the insurance companies refuse to fairly deal with claimants; why would a multibillion-dollar insurance company try to fight its insured’s 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 then it is to not pay out on one legitimate large claim. Some insurance company’s 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.
Most people think that because they have been a loyal customer for many years that their own insurance company will treat them fairly. This is not always the case. From the perspective of an insurance company, every claim reduces profits, whether the claim is made by a third party against their insured’s or by their own insured’s themselves. Therefore, to trust your own insurance company to do all it can to maximize your payout against themselves goes against common sense.
So what constitutes bad faith by the insurance company?
There is no clear answer to this as the facts of each individual case are looked at on a case by case basis. In its broadest sense, an insurance company acts in bad faith when it denies a claim or makes a nominal offer without giving any rational reason for the denial or low offer.
If a successful claim for bad faith is found, the insurance company can be forced to pay punitive damages in addition to the compensatory damages it is required to pay for your injuries. These punitive damages are paid to the insured injured and can be several times as large as the actual compensatory damages caused by the accident.
If you believe your insurance company is delaying payment on your insurance claim or your insurance company has wrongfully denied payment for your insurance claim, a competent 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.
To help you find out 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 800-218-4243, we are here to help you.