Did you know under Ohio law you may have a bad faith claim against your insurance company if it fails to act timely and fairly when handling your insurance claim?

You pay your insurance premiums faithfully, trusting your insurer to be there for you when things go wrong—whether it’s after a car accident or when you are seeking the compensation your policy provides. But what happens when your insurer fails to uphold its end of the bargain?

Without intention to paint narrow strokes with a wide brush, generally insurance agents, adjusters, and other insurance professionals have good intentions. However, sometimes the insurance company chooses its bottom line to the detriment of its own insured. That’s where we come in.

Welcome to the world of bad faith insurance practices and your rights under Ohio law.

What is Bad Faith?

In Ohio, insurance companies have a positive legal duty to act in good faith toward their insured when handling insurance claims covered under the policy. Bad faith liability is a legal concept that protects insureds from unfair treatment by their insurers. Bad faith occurs when an insurer fails to act in good faith.

The Zoppo Case: A Landmark Ohio Decision

In Zoppo v. Homestead Ins. Co., 71 Ohio St.3d 552 (1984), the Ohio Supreme Court held that, “An insurer fails to exercise good faith in the processing of a claim of its insured where its refusal to pay the claim is not predicated upon circumstances that furnish reasonable justification therefor.” This holding clarified the standard for determining whether an insurance company has acted in bad faith.

Understanding the Two Types of Claims: First Party vs. Third Party

Understanding bad faith starts with knowing what type of insurance claim you are dealing with:

• First Party: These are claims you as the policyholder (the “insured) file directly with your insurance company for losses you suffered. This could be an Uninsured/Underinsured (UM/UIM) motorist claim or property damage claim in auto accidents.
• Third Party: These occur when someone else sues you and your insurance company is supposed to defend or settle the case on your behalf. This could be when you are the at-fault party in an auto accident. If your insurer refuses to settle the claim within policy limits, putting you at risk of a judgment, they may be acting in bad faith. However, injured third parties (such as people hurt by a policyholder) generally cannot sue the at fault party’s insurance company for bad faith.

Whether you are experiencing bad faith behavior from your insurer handling a first party claim you filed, or a third-party claim filed against you, as the insured, you may have a bad faith claim.

Signs Your Insurance Company May Be Acting in Bad Faith:

Bad faith can look like:

• Insurer denying a claim with no justification.
• Unreasonable delays in payment
• Failure to reasonably investigate or resolve claim

When these actions cause you financial and emotional harm, Ohio law gives you the right to take action. Not only for the benefits owed, but for the insurer’s bad faith behavior itself.

Why This Matters

After an accident, you’re already dealing with injuries, bills, lost income, and stress that can feel overwhelming. The last thing you should have to worry about is your insurance company making things harder.

Ohio law recognizes that you can be harmed not only by accidents, but by the very companies meant to protect you. This is why bad faith liability exists: to hold insurance companies accountable and ensure they treat you fairly while following through on their promises.

If you have been injured due to negligence and want to ensure your claim is handled with care, and your rights are protected, call Lardiere McNair & Stonebrook Ltd., LPA, (614) 534-1355 and schedule a free consultation. Working with a knowledgeable attorney can help ensure you receive the full benefits and the compensation you’re entitled to under the law.

Alexis Frederick is a Law Clerk at Lardiere McNair & Stonebrook, Ltd., LPA.

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