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Car insurance claim denied? What 'bad faith' means and where to complain

A denial is not always the end. Each state sets rules for how fast an insurer must answer and what it may not do, and its insurance department takes complaints. 'Bad faith' is a separate, harder claim. This page shows what the sources say for four states. General information, not legal advice.

General information, not legal advice. Updated November 9, 2026. Attorney review pending

On this page
  1. What the insurer must do first
  2. Counting the days
  3. What the statutes call unfair or improper
  4. Bad faith as a court claim
  5. Each state's insurance department
  6. What this page does not do
  7. Questions
  8. Sources

Before bad faith

What the insurer must do first

A closed manila folder and a sealed envelope rest on a wooden desk beside a notebook and paperclip.
A denial letter is not the final word. Keep every document and note the deadlines.

Most denials never reach a bad-faith claim. States regulate how an insurer must handle a claim, and those rules are the first thing to check. The ones below apply to a first-party claim, meaning a claim on your own policy.

State How fast the insurer must say yes or no What the denial must contain
Tennessee Within sixty days after the insurer receives properly completed proofs of loss and the documents the policy requires [3]. A basis for the denial; in writing on request.
Alabama Within thirty days (or the days the policy specifies) after receiving properly executed proofs of loss [4]. Reference to the specific policy provision, condition or exclusion.
Oklahoma Within sixty days after receiving properly executed proofs of loss, advise of acceptance or denial, "or if further investigation is necessary." [6] Reference to the provision, condition or exclusion; denial in writing.
South Carolina Not verified. Not verified.

If the insurer needs more time, Tennessee, Alabama and Oklahoma each require it to say so and give reasons. These rules protect a policyholder with a first-party claim. A person hurt by someone else's insurance is a third-party claimant; Tennessee's statute, for example, says some of its practice rules "shall not apply to denials of, or offers of compromise settlement of, third-party claims." [1]

Worked example

Counting the days

Two clocks from proof of loss received to the day the insurer must say yes or no: Alabama 30 days, Tennessee 60 days, Oklahoma sixty days or say more time is neededDay 0Day 30Day 60Alabama30 daysTennessee60 daysOklahoma60 days
From proof of loss received to the day the insurer must say yes or no.
  • The insurer must say yes or no
  • Alabama: 30 days, or the number of days specified in the policy. Tennessee: 60 days. Oklahoma: sixty days, or say more time is needed.

Suppose the insurer receives your properly completed proof of loss on March 1. Applying the deadlines in the table:

  • Alabama (30 days, or the number of days specified in the policy): with 30 days, a status of acceptance or denial is due by March 31. If your policy specifies a different number of days, count that many from March 1 instead; check your policy.
  • Tennessee and Oklahoma (60 days): due by April 30.

Alabama's and Tennessee's rules count from the insurer's receipt of the proofs of loss, so the date that matters is the one the insurer recorded. The rules also let an insurer that needs more time say so in writing and give its reasons. Keep your own dated copy of what you sent, and write down when you sent it.

Unfair practices

What the statutes call unfair or improper

Each state lists acts that regulators treat as unfair claim practices. These lists are not the same as a lawsuit, but they show what regulators watch for.

  • Tennessee. The list includes "Refusing to pay claims without conducting a reasonable investigation" and "Failing to affirm or deny coverage of claims within a reasonable time after proof of loss statements have been completed." [1]
  • Oklahoma. The list includes "Not attempting in good faith to effectuate prompt, fair and equitable settlement of claims submitted in which liability has become reasonably clear" and requesting a release "that extends beyond the subject matter that gave rise to the claim payment." [5]
  • South Carolina. Improper claim practices are acts "committed without just cause and performed with such frequency as to indicate a general business practice," and the list covers third-party liability claims too, including "unreasonable delay in paying or an unreasonable failure to pay or settle in full claims." [7]
  • Alabama. We read the department's claims-handling rules (denial reasons and deadlines, above). We did not locate a statutory list of unfair practices to quote.

Tennessee also has a statutory penalty, not a tort: when a loss occurs and the insurer refuses to pay within sixty days after a demand, it can be liable for "a sum not exceeding twenty-five percent (25%) on the liability for the loss" if the refusal "was not in good faith." [2] The statute says that must be "made to appear to the court or jury trying the case" and that the failure inflicted additional expense, loss or injury [2].

The court claim

Bad faith as a court claim

"Bad faith" in the legal sense is a lawsuit theory against an insurer, and the three states' high courts describe it in different words. These cases concern a policyholder suing its own insurer.

  • Alabama. Chavers (1981): "we recognize the intentional tort of bad faith in first party insurance actions." [8] The court said the elements may be proved by circumstantial as well as direct evidence [8].
  • South Carolina. Nichols (1983) was "a tort action for bad faith refusal to pay first party benefits under an insurance policy" and the Court affirmed a verdict for the insured [9].
  • Oklahoma. Christian (1977): "We approve and adopt the rule that an insurer has an implied duty to deal fairly and act in good faith with its insured and that the violation of this duty gives rise to an action in tort." [10] The court added that it did not hold that an insurer who "resists and litigates a claim" does so "at its peril." [10]
  • Tennessee. We found the statutory penalty above but did not verify a bad-faith tort rule, so we state none.

These are old decisions, and later cases and statutes may have changed the details. We did not run a citator. A lawsuit also has its own deadlines. Whether a person hurt in someone else's crash can claim against that driver's insurer directly is a separate question we do not cover.

Where to complain

Each state's insurance department

All four departments take complaints about insurers. They can ask the insurer to respond; none of the pages we read says the department can decide fault or the value of a claim.

State Office and what its page says
Tennessee Department of Commerce & Insurance, Consumer Insurance Services: It "handle[s] most insurance problems involving homeowners, automobile, health, life..." and mediates claim disputes [11].
Alabama Department of Insurance, Consumer Services: First contact the company or producer; if unsatisfied, fill in the online form [12]. It cannot "Determine who was negligent or at fault" or "Determine the value of a claim or the amount of money owed to you." [12]
Oklahoma Insurance Department, Consumer Assistance: Contact your insurer and ask for an explanation first. It cannot "Order the company to pay your claim" or "Decide who was at fault in an accident." [13]
South Carolina Department of Insurance, Consumer Services: Try to resolve it with the company first; the department can "require them to provide an explanation for their actions." [14]

Alabama's page says the department cannot assist if you have an attorney [12]. Check each page before relying on it; contact details and processes change.

Not covered

What this page does not do

We left out "reservation of rights" letters, delay-tactic lists and reasons particular injuries get denied, because we did not find a primary source for each in these four states. We also do not estimate what a bad-faith claim might be worth. See diminished value and totaled car for two common disputes, and the insurer call card for a printable note sheet.

Want to talk it through? A person usually calls you back in about 15 minutes (8am to 8pm Central). You never pay CrashFirst. CrashFirst is not a law firm, does not evaluate your claim and does not give legal advice. General information as of November 9, 2026.

Sources

Unofficial copies come from a legal publisher, not the state. They can lag the current code, so check the official code before relying on a date or amount.

Page last updated November 9, 2026. Attorney review pending. General information, not legal advice. Fees, hours and rules change; confirm on the official page. How we source.

Questions

What is bad faith in insurance?

It is a legal claim that an insurer wrongly refused or delayed a claim without a proper reason, separate from simply disagreeing about the amount. Alabama's Supreme Court described the tort as an insurer's intentional refusal to settle a direct claim where there is either "no lawful basis for the refusal coupled with actual knowledge of that fact" or "intentional failure to determine whether or not there was any lawful basis for such refusal." [8]

How do I fight an insurance denial?

The sources we read point to a few official steps rather than a formula: the denial must give a basis, the insurer must answer within the state's deadlines, and each state's insurance department takes complaints and asks the insurer to respond. Tennessee's department says it "takes an active role as a third-party mediator." [11] We do not tell you whether to file or what to say.

What are three ways an insurer can be liable for bad faith?

Statutes list improper practices rather than a fixed number of ways to be liable. South Carolina's list includes "not attempting in good faith to effect prompt, fair, and equitable settlement of claims" where liability is reasonably clear [7], compelling claimants to sue by offering substantially less than they recover, and an unreasonable delay in paying. Whether a practice is also bad-faith tort liability is a separate legal question.

How do you prove a bad faith claim?

That is a question of law and proof for each state's courts, and we do not describe how to win one. As an example of the standard, Alabama's Chavers case (above) requires showing no lawful basis for the refusal plus knowledge of that fact, or intentional failure to find out whether there was one. Oklahoma and South Carolina courts treat the insurer's duty as an implied duty of good faith and fair dealing.

Does the insurer have to tell me why it denied my claim?

In the three states where we read the rule, yes. Tennessee: "No insurer shall deny a claim without providing a basis for the denial." [3] Alabama: no insurer may deny "on the grounds of a specific policy provision, condition or exclusion unless reference to such provision, condition, or exclusion is included in the denial." [4] Oklahoma: a denial "shall be given to any claimant in writing." [6]

Why do PTSD claims get denied?

We did not find an official source that explains reasons for denial of a particular type of injury claim, so we do not speculate. Your insurer's denial must state its basis; see the answer above.

CrashFirst is not a law firm and does not give legal advice. This checklist is general information. Every situation is different.

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