Insurance Bad Faith Claims in Montana
You pay your insurance premiums expecting that when you need coverage, your insurer will honor the policy. But insurance companies are profit-driven corporations, and they routinely deny, delay, and underpay valid claims. When an insurer unreasonably refuses to pay what it owes, Montana law provides powerful remedies through bad faith claims.
Montana is one of the most policyholder-friendly states in the country for insurance bad faith litigation. At Cannon Breck Law, we hold insurers accountable when they violate their obligations to Montana policyholders.
Montana’s Unfair Trade Practices Act (UTPA)
The Montana Unfair Trade Practices Act (MCA § 33-18-201) prohibits insurance companies from engaging in unfair claims settlement practices. Specific violations include:
- Misrepresenting policy provisions to avoid paying claims
- Failing to acknowledge communications about claims with reasonable promptness
- Failing to adopt reasonable standards for prompt investigation of claims
- Not attempting in good faith to reach a fair settlement when liability is reasonably clear
- Compelling policyholders to file lawsuits to recover amounts due by offering substantially less than what the claim is worth
- Failing to promptly provide a reasonable explanation for denial of a claim
- Attempting to settle claims for less than a reasonable person would believe they were entitled to
- Delaying investigation or payment of claims by requiring duplicative documentation
Common Insurance Bad Faith Tactics
Insurance companies operating in Montana — including those handling auto, homeowner, health, and commercial claims in the Flathead Valley — commonly engage in:
- Unreasonable delays — Dragging out the investigation for months or years, hoping the policyholder gives up or accepts less
- Lowball offers — Offering a fraction of the claim’s value, particularly for property damage, medical bills, or business interruption losses
- Wrongful denial — Denying valid claims by misinterpreting policy language or inventing exclusions that don’t apply
- Surveillance and investigation overreach — Hiring private investigators to find reasons to deny legitimate injury claims
- Requiring unnecessary IMEs — Sending injured claimants to “independent” medical examiners who are, in reality, paid defense doctors who routinely minimize injuries
- Rescission — Canceling the policy retroactively based on alleged misrepresentations in the application, often discovered only after a major claim is filed
Damages in Montana Bad Faith Cases
Montana allows significant damages in bad faith insurance cases:
- The original claim amount — What the insurer should have paid under the policy
- Consequential damages — Financial harm caused by the insurer’s delay or denial (e.g., foreclosure due to unpaid property damage claim, medical debt from unpaid health claims)
- Emotional distress damages — Montana courts recognize that insurance bad faith causes real psychological harm
- Punitive damages — Under MCA § 27-1-221, punitive damages are available when the insurer acted with actual malice or deliberate disregard for the policyholder’s rights. Montana juries have awarded multi-million-dollar punitive verdicts against insurers
- Attorney fees — Recoverable in successful UTPA cases
Independent Cause of Action
Montana recognizes bad faith as an independent cause of action in tort — meaning you can sue your insurer for bad faith regardless of whether the underlying claim is eventually paid. Even if the insurer ultimately pays the claim, the bad faith conduct itself is actionable. This is a stronger standard than many states that only allow bad faith claims as part of a breach of contract action.
First-Party vs. Third-Party Bad Faith
First-party bad faith occurs when your own insurance company fails to honor your policy. Examples include your auto insurer denying a collision claim, your homeowner insurer underpaying a storm damage claim, or your health insurer refusing to cover a medically necessary procedure.
Third-party bad faith occurs when your insurer fails to properly defend you against a claim by someone else — for example, if your liability insurer refuses to settle a lawsuit within policy limits, exposing you to a judgment exceeding your coverage.
Statute of Limitations
Montana’s statute of limitations for insurance bad faith claims is generally two years for UTPA violations and five years for breach of the insurance contract. However, the discovery rule may toll the deadline if the bad faith conduct was not immediately apparent. Given the complexity of these deadlines, consulting an attorney promptly is essential.
Montana’s Policyholder-Friendly Precedent
Montana courts have a strong history of protecting policyholders. Notable precedents include the principle that ambiguous policy language is construed in favor of the insured, and that insurers owe a fiduciary-like duty of good faith to their policyholders. This legal landscape makes Montana a favorable jurisdiction for bad faith claims.
Contact Cannon Breck Law
If your insurance company has denied your claim, delayed payment unreasonably, or offered far less than your claim is worth, you may have a bad faith case. The attorneys at Cannon Breck Law fight insurance companies throughout Montana, including Kalispell, Whitefish, Columbia Falls, and the entire Flathead Valley.
Contact us today for a free consultation about your insurance dispute.
