Oklahoma case law and statutory enactments make it clear that an insurance company has a duty of good faith and fair dealing. Additionally, they have a duty to investigate as well as a duty to communicate. Under Oklahoma law the insurance carrier has an affirmative duty to seize a reasonable opportunity to protect their insured from excess liability. They have a duty to act in a diligent manner in relation to investigation, negotiation, defense, and settlement of claims. Oklahoma law imposes a duty to inform the insured.
In the case of Christian v. American Home Assurance Company the Oklahoma Supreme Court established bad faith as an independent tort upon which an insurer could be held liable for both compensatory and punitive damages for the delay or denial in payment of a claim which was not reasonably in dispute. The Supreme Court noted that an insurer’s obligation upon presentation of a proper claim is not limited to the payment of money alone, but includes an implied duty of the insurer to “deal fairly and act in good faith with its insured” and the violation of this implied duty can impose tort liability upon the insurance company. Christian v. American Home Assurance Company, 1977 OK 141, at ¶ 19, ¶ 25. 577 P.2d 916.
Oklahoma law allows for compensatory damages from bad faith actions. The compensatory damages recoverable in a bad faith case include those for financial losses, embarrassment and loss of reputation, and the emotional distress proximately resulting from the insurer’s improper conduct. See OUJI-Civ. 22-4.
Oklahoma law provides for tort claims against insurers when there is a clear showing that the insurer acted unreasonably and in bad faith. VBF, Inc. v. Chubb Group of Insurance Companies, 263 F.3d 1226 (10th Cir. Oklahoma 2001).
Oklahoma bad faith law is discussed in Badillo v. Mid Century Insurance Company, 2005 OK 48, 121 P.3d 1080 (2005). The relevant discussions and holdings are set forth below.
In Badillo, the Oklahoma Supreme Court held that “the minimum level of culpability necessary for liability against an insurer to attach is more than simple negligence, but less than the reckless conduct necessary to sanction a punitive damage award against an insurer.” Id. at ¶ 28.
In a third party situation, “an insurer’s duty of good faith and fair dealing includes the duty to act in a diligent manner in relation to investigation, negotiation, defense, and settlement of claims being made against the insured.” Id. at ¶ 36.
“The duty to inform the insured of settlement opportunities is one of the duties subsumed within the duty of good faith owed by an insurer to an insured. . . Although failure to so inform does not automatically establish breach of the duty of good faith and fair dealing, it is one factor the jury may consider in deciding whether the insurer acted in violation of the duty of good faith and fair dealing.” Id. at ¶ 36.
“It also has been recognized that an insurance company’s decisions regarding settlement must be made based on a thorough investigation of the underlying circumstances of the claim and on informed interaction with the insured. . . The duty of an insurance company in this type of situation includes the duty of timely and adequately informing insured of the statement request, particularly given its importance as to settlement probability within the policy limits.” Id. at ¶ 35.
Insurers are required to approach settlement as if the policy limits do not exist and to ignore the policy limits during settlement negotiations. “The reason for the rule is that an insurance company, in dealing with a third-party claim against its insured, is acting in a fiduciary capacity toward its insured by virtue of the terms of the insurance policy which give the insurer the authority to determine whether an offer of compromise should be accepted or rejected. . . or the insurer is acting as an agent of the insured, the carrier being in control of the claim.” Id. at ¶ 27.
“An insurer has an ‘implied-in-law duty to act in good faith and deal fairly with the insured to ensure that the policy benefits are received. Christian v. American Home Assurance Co., 1977 OK 141, 577 P.2d 899, 901. An insurer may not treat its own insured in the manner in which an insurer may treat third-party claimants to whom no duty of good faith and fair dealing is owed.’ Newport v. USAA, 2000 OK 59, ¶ 15, 11 P.3d 190, 196. In dealing with third parties, however, the insured's interests must be given faithful consideration and the insurer must treat a claim being made by a third party against its insured's liability policy ‘as if the insurer alone were liable for the entire amount’ of the claim. See American Fidelity & Casualty Co. v. L. C. Jones Trucking Co., 1957 OK 287, 321 P.2d 685, 687.” Id. at ¶ 26 (emphasis supplied).
“The essence of an action for breach of the duty of good faith and fair dealing ‘is the insurer's unreasonable, bad-faith conduct . . . and if there is conflicting evidence from which different inferences may be drawn regarding the reasonableness of insurer's conduct, then what is reasonable is always a question to be determined by the trier of fact by a consideration of the circumstances in each case.’ McCorkle v. Great Atlantic Ins. Co., 1981 OK 128, 637 P.2d 583, 587.” Id. at ¶ 28.
“. . . a carrier's duty of good faith and fair dealing in the situation reasonably shown by this record involves more than making an offer to settle for or within policy limits, or simply not refusing unconditional settlement offers within those limits. It has even been held, if an insured's liability is clear and the injuries of a claimant are so severe that a judgment in excess of policy limits is likely, the insurer has an affirmative duty to initiate settlement negotiations.” Id. at ¶ 33 (emphasis supplied).
“It has also been recognized that an insurance company's decisions regarding settlement must be made based on a thorough investigation of the underlying circumstances of the claim and on informed interaction with the insured. Mowry v. Badger State Mutual Casualty Co., 129 Wis.2d 496, 385 N.W.2d 171, 178 (1986). The duty of an insurance company in this type of situation includes the duty of timely and adequately informing insured of the progress of settlement negotiations. Baker v. Northwestern National Cas. Co., 22 Wis.2d 77, 125 N.W.2d 370, 373 (1963). . . that would include timely and adequately informing insured of the statement request, particularly given its importance as to settlement probability within the policy limits.” Id. at ¶ 35.
The Badillo case discusses the statutory ability of a jury to award punitive damages. The Court stated, “ 23 O. S. 2001, § 9.1 provides that a jury may award punitive damages if it finds, by clear and convincing evidence, that an insurer has recklessly disregarded its duty to deal fairly and act in good faith with its insured [§ 9.1(B)] or an insurer has intentionally and with malice breached said duty. § 9.1(C)(2).” Id. at ¶ 64.
Oklahoma law presents a heavy duty on insurance companies to treat their insured fairly minor insured has negligently or recklessly caused injury to another person. At Brad Pistotnik Law we have handled many tractor-trailer accidents, semi-accidents, big truck accidents and other car accidents and motorcycle accidents. Brad Pistotnik Law helps personal injury victims who have been injured.
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