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A bad faith lawsuit can be brought when an insurer unreasonably denies or delays the payment of valid claims under a policy, breaching the implied covenant of good faith and fair dealing. Suing an insurance company for bad faith presents a range of legal and procedural obstacles, as insurers are well-resourced and advised by experienced counsel. Policyholders must not only prove entitlement to benefits but also that the insurer’s conduct was unreasonable or malicious.

Here are defenses to bad faith claims that insurance companies routinely employ, and how plaintiffs’ attorneys can counter them:

• Bona fide dispute — The insurer may argue that a genuine disagreement existed regarding coverage, liability or the value of the claim, perhaps due to conflicting evidence or factual uncertainties. Plaintiffs’ attorneys can counter this argument with evidence that the insurer’s interpretation was unreasonable in light of controlling law, industry standards or the insurer’s own prior conduct. They can also argue that the denial was outcome-driven rather than objectively justified.

• Reasonable basis for denial — Insurers may assert they conducted a fair investigation and found reasonable cause to deny the claim. They may present internal documents and claim handling notes demonstrate earnest attempts to assess the claim. Plaintiff’s attorneys can attack the adequacy and thoroughness of the investigation, uncover overlooked evidence, expose delays and show that information favoring coverage was ignored or discounted.

• Lack of coverage — Insurers may argue that the policy language excludes the claimed event or that the loss is outside policy terms. Courts are generally reluctant to find bad faith if exclusion is unambiguous, even if the claim handling itself was poor. Plaintiffs’ counsel can respond by arguing that policy language is ambiguous and should be interpreted against the interests of the party who drafted it. They can also point to a pattern of the company accepting similar claims.

• Statute of limitations — Insurers may claim that the lawsuit is time-barred by statute or policy terms. Plaintiffs’ lawyers may argue for tolling or estoppel or that the limitations period began running later than the insurer suggests, such as when the bad faith was “discovered.”

• Reverse bad faith or misconduct — The insured’s comparative bad faith (e.g., fraud, false statements or lack of cooperation) could reduce or bar recovery. Attorneys can present evidence of the insured’s good faith, full cooperation and honesty throughout the claim, and can challenge assertions of misconduct as pretextual or immaterial.

• Failure to mitigate damages — The insurer may claim that the insured failed to minimize losses. Plaintiffs’ attorneys can document the insured’s mitigation efforts, temporary repairs, alternate accommodations or communication seeking guidance from the insurer.

• Release or settlement agreement — A prior signed release may bar subsequent bad faith claims. Plaintiffs’ attorneys scrutinize waiver language and circumstances, arguing for invalidation due to fraud, duress, unconscionability, or lack of informed consent.

• Advice of counsel — Insurers sometimes argue that they relied on legal advice. However, raising this defense can result in a waiver of attorney-client privilege regarding those communications, opening the door for deeper discovery into the insurer’s decision-making. An experienced insurance bad faith lawyer will leverage this to obtain internal legal advice and reveal questionable reliance or legal opinions that don’t justify the insurer’s actions.

If the insured prevails, available damages may include the original policy benefits plus interest, consequential damages caused by the denial (such as lost income, property damage or medical costs), mental anguish and emotional suffering, attorneys’ fees and court costs. In egregious cases, punitive damages may be awarded to deter similar conduct by the insurer.

At Walsh & Franseen in Edmond, we have wide experience dealing with cases of insurer bad faith in Oklahoma. We know how to hold insurance companies to their obligations. Call 405-843-7600 or contact us online to schedule a free consultation.