Oklahoma
How Bowers v. State Farm Fire & Casualty Co. applies in Oklahoma: state-specific rules, key cases, and bar exam notes for Insurance Law.
Oklahoma law recognizes the concept of the implied covenant of good faith and fair dealing in insurance contracts, similar to federal interpretations. Courts in Oklahoma are attentive to the obligations of insurers to act in good faith towards their insureds, particularly in claims handling.
Oklahoma law requires insurance companies to act in good faith and fair dealing, meaning they must thoroughly investigate claims and refrain from unfair practices that could harm policyholders.
The court ruled that an insurer's failure to adequately investigate a claim can constitute a breach of the implied covenant of good faith and fair dealing.
This case established that an insurer may be liable for punitive damages if it is found to have acted in bad faith in denying coverage.
The court affirmed that an insurer's arbitrary refusal to pay a claim can result in liability for bad faith.
While federal law also emphasizes good faith and fair dealing in insurance contracts, Oklahoma's approach is notably broader, allowing for tort claims against insurers. This expansive view often results in a more favorable context for insured individuals in Oklahoma compared to the more restrained federal context.
Students should be aware of the principles of good faith and fair dealing in insurance contracts as they are frequently tested on the Oklahoma bar exam, especially in relation to claims handling and insurer liability.