Practice areaInsurance Bad Faith
Montana Insurance Bad Faith Lawyers: Denied Claims, Delayed Claims and Lowball Offers
Boland Aarab PLLP.
As Montana insurance bad faith lawyers, we start from a simple fact: an insurance company is not a neutral referee. Whether it is your own insurer or the insurer for the person who hurt you, the company decides how fast to investigate, what to pay and when to pay it, and it keeps the file that records every one of those decisions. Montana law sets rules for that conduct in the Unfair Trade Practices Act, and it gives both policyholders and injured people the right to sue when an insurer breaks certain of those rules.
Key Takeaways
- Montana’s Unfair Trade Practices Act lists 15 prohibited claim practices (§ 33-18-201, MCA). Six of them can support your own lawsuit against the insurer (§ 33-18-242(1), MCA).
- The deadlines are short: 2 years from the violation for a policyholder, and 1 year from the settlement or judgment on the underlying claim for an injured third party (§ 33-18-242(8), MCA).
- When liability is reasonably clear, a liability insurer may have to pay an injured person’s medical bills, and certain lost wages, before a final settlement (Ridley v. Guaranty National Insurance Co., 1997).
- An insurer is not liable under the statute if it had a reasonable basis in law or in fact for contesting the claim (§ 33-18-242(6), MCA). The claim file usually decides that question.
On this page: What bad faith is · First-party and third-party · Prohibited practices · Your right to sue · Other claims · Ridley payments · Warning signs · What to do · How we build the case · Damages · Deadlines · Why Boland Aarab · FAQ
Denied, delayed or lowballed by an insurance company? Contact Boland Aarab PLLP for a free consultation at (406) 315-3737.
What is insurance bad faith in Montana?
Insurance bad faith is the unreasonable handling of an insurance claim: refusing to pay without a real investigation, sitting on a claim, misstating what the policy says, or offering far less than the claim is worth when the facts are clear. In Montana, most of these rules come from the Unfair Trade Practices Act, often called the UTPA, codified in Title 33, chapter 18 of the Montana Code.
Two points shape every case:
The statute, not a feeling of unfairness, sets the standard. A claim can be frustrating, slow and disappointing without being unlawful. The question is whether the insurer violated one of the specific practices the Legislature prohibited, and whether it had a reasonable basis for its position.
The evidence is in the insurer’s file. Claim notes, reserve changes, adjuster emails, internal guidelines and the timing of each decision show what the company knew and when. That file is the heart of a bad-faith case.
What is the difference between first-party and third-party bad faith?
It depends on whose insurer you are dealing with.
| First-party claim | Third-party claim |
|---|
| Whose insurer | Your own insurance company | The insurer for the person or business that injured you |
| Common examples | Homeowners, fire, hail or theft claims; business and commercial property claims; auto collision; uninsured and underinsured motorist (UM/UIM) claims | An injury claim against a negligent driver, property owner or business |
| What the insurer owes | The benefits promised in your policy | Fair, prompt handling of the claim once liability is reasonably clear |
| When you can sue under the UTPA | Any time, and together with a contract claim (§ 33-18-242(7)(a)) | Only after the underlying injury claim is settled or a judgment is entered for you (§ 33-18-242(7)(b)) |
| Deadline under the UTPA | 2 years from the violation | 1 year from the settlement or judgment |
First-party bad faith is a breach of the relationship you paid for. You bought a homeowners, business, auto or UIM policy, you suffered a covered loss, and the company that took your premiums will not pay what it owes.
Third-party bad faith arises when you are hurt by someone else and deal with that person’s insurer. You are not its customer, but Montana still requires the insurer to handle your claim fairly, and in some circumstances to pay clear medical expenses before the case is finally resolved.
What claim practices does Montana law prohibit?
Section 33-18-201, MCA, prohibits 15 unfair claim settlement practices when an insurer commits them “with such frequency as to indicate a general business practice.” The key subsections provide that an insurer may not:
- (1) misrepresent pertinent facts or insurance policy provisions relating to coverages at issue;
- (2) fail to acknowledge and act reasonably promptly upon communications about claims;
- (3) fail to adopt and implement reasonable standards for the prompt investigation of claims;
- (4) refuse to pay claims without conducting a reasonable investigation based on all available information;
- (5) fail to affirm or deny coverage within a reasonable time after proof of loss statements have been completed;
- (6) neglect to attempt in good faith to effectuate prompt, fair and equitable settlements of claims in which liability has become reasonably clear;
- (7) compel insureds to sue to recover amounts due under the policy by offering substantially less than the amounts they ultimately recover;
- (9) attempt to settle claims on the basis of an application that was altered without the insured’s notice, knowledge or consent;
- (13) fail to promptly settle claims, where liability has become reasonably clear, under one portion of the policy’s coverage in order to influence settlements under other portions; and
- (14) fail to promptly provide a reasonable explanation, based on the policy and the facts or law, for denying a claim or offering a compromise settlement.
The remaining subsections cover advertising-based settlement offers, payments made without a coverage statement, threats to appeal arbitration awards, duplicate claim-report requirements, and a policyholder’s right to a list of claims charged against the policy (§ 33-18-201(8), (10), (11), (12), (15), MCA).
Who can sue an insurer under Montana’s Unfair Trade Practices Act?
Both policyholders and injured third parties can. Section 33-18-242(1), MCA, gives “an insured or a third-party claimant” an independent cause of action against an insurer for actual damages caused by a violation of six specific subsections of § 33-18-201:
| Subsection | The practice |
|---|
| (1) | Misrepresenting facts or policy provisions |
| (4) | Refusing to pay without a reasonable investigation |
| (5) | Failing to affirm or deny coverage within a reasonable time |
| (6) | Failing to attempt a prompt, fair and equitable settlement once liability is reasonably clear |
| (9) | Settling on the basis of an altered application |
| (13) | Holding back one part of a clear claim to gain leverage on another |
Three rules in the statute matter most in practice:
- No pattern required. In your own lawsuit, you do not have to prove the insurer treats everyone this way. The “general business practice” requirement does not apply (§ 33-18-242(2)).
- The reasonable-basis defense. The insurer is not liable if it “had a reasonable basis in law or in fact for contesting the claim or the amount of the claim, whichever is in issue” (§ 33-18-242(6)). Insurers raise this defense in nearly every case. Whether the basis was real, or was built after the fact, is often answered by the timeline in the claim file.
- Timing for third parties. An injured third party cannot bring the statutory claim until the underlying claim has been settled or a judgment entered in the claimant’s favor (§ 33-18-242(7)(b)). A policyholder may file the statutory claim together with any other claim against the insurer, and the court may split the trial where justice requires (§ 33-18-242(7)(a)).
What other claims can you bring against an insurer?
A statutory claim is rarely the only one. Depending on the facts, a case against an insurer can also include:
- Breach of the insurance contract, for the benefits the policy promised and the insurer did not pay;
- Fraud, when the insurer misled you about your coverage or your claim; and
- Punitive damages, when the insurer acted with actual fraud or actual malice (see the damages section below).
Which claims fit your case depends on whether you are the policyholder or an injured third party, on what the insurer did, and on when it happened. We sort that out at the start, before any deadline runs, so that nothing available to you is left on the table.
What are Ridley payments?
Ridley payments are advance payments of an injured person’s medical expenses by the at-fault party’s insurer, before any final settlement. They take their name from Ridley v. Guaranty National Insurance Co., 286 Mont. 325, 951 P.2d 987 (1997).
In Ridley, the insurer admitted its insured was largely at fault but refused to pay the injured man’s medical bills unless he signed a full and final settlement. The Montana Supreme Court held that, under § 33-18-201(6) and (13), a liability insurer may not defer payment of an injured third party’s medical expenses until final settlement when liability is reasonably clear and it is reasonably clear that the expense is causally related to the accident (Ridley).
The Court later extended the duty to lost wages that are “reasonably certain and directly related to an insured’s negligence or wrongful act,” but not to general damages such as pain and suffering (DuBray v. Farmers Insurance Exchange, 2001 MT 251). The Court has continued to apply these rules in recent decisions (D’Hooge, 2026 MT 63, n.1).
Ridley payments matter most for people hurt in car and truck crashes. Medical bills arrive long before a case can fairly be valued, and an insurer that holds clear payments hostage to a full release is using the injured person’s need against them.
What are the warning signs of a bad-faith claim?
None of these proves bad faith on its own. Each is worth a closer look:
- A denial with no real explanation, or one that cites a policy provision that does not fit the facts.
- Months of silence, unreturned calls, or a claim reassigned again and again with no decision.
- Repeated requests for the same documents, or for records that have nothing to do with the loss.
- A lowball offer far below repair estimates, medical bills or the policy’s stated value, with no breakdown.
- An investigation that ignores your evidence and relies only on the insurer’s own hired reviewer.
- Pressure to sign a full release before clear medical bills are paid.
- Changing reasons for a denial each time the last reason is answered.
- A UIM claim treated as adversarial from day one, even though you are the insurer’s own customer.
- A homeowners or business claim stalled over “cause of loss” arguments after the insurer has already inspected.
What should you do if your insurance claim is denied or delayed?
- Get the policy. Request a complete, certified copy of your policy, including all endorsements, if you do not have one.
- Ask for the reason in writing. Montana law expects a reasonable explanation of a denial or compromise offer (§ 33-18-201(14), MCA).
- Keep a record. Save every letter, email and text. Write down the date, time and name for each phone call, and what was said.
- Document the loss. Photos, estimates, receipts, medical records and wage records. Do not throw away damaged property until it has been documented.
- Be careful with recorded statements and new authorizations. Read what you are asked to sign. A broad medical authorization can reach far beyond the claim.
- Watch the calendar. Policies contain their own notice, proof-of-loss and suit provisions, and the UTPA deadlines are short.
- Talk to a lawyer before you accept a final offer or sign a release. A release can end claims you did not know you had.
You may also file a complaint with the Montana Commissioner of Securities and Insurance, the state insurance regulator. A complaint is not a lawsuit and does not stop any deadline.
How do we build an insurance bad faith case?
When an insurer broke the rules, we build the case on its own claim file. The work usually follows these steps:
- Lock down the timeline. Every notice, request, response and payment, in order. Delay cases are won or lost on dates.
- Match each decision to the policy. What the policy actually says, and whether the insurer’s stated reasons fit its language.
- Get the file. In litigation, we pursue the complete claim file, adjuster notes, reserve history, internal guidelines, and the reports of any consultants the insurer hired.
- Test the “reasonable basis.” We compare what the insurer knew at each point with what it said and did. A reason that appears only after suit is filed is not the same as a reason that existed when the claim was denied.
- Prove the harm. Unpaid benefits, added costs, lost business, credit damage, distress, and the fees you were forced to spend to get what the policy promised.
- Prepare for trial. Insurers value cases by the lawyers who will try them. We build every serious case as if it will be tried, and then appealed.
What can you recover in a Montana bad-faith case?
It depends on the claim and the facts, but recoverable amounts can include:
- The policy benefits owed, through a breach-of-contract claim.
- Actual damages proximately caused by the UTPA violation (§ 33-18-242(5), MCA). Depending on the case, this can include financial losses beyond the policy benefits and emotional distress.
- Attorney fees for policyholders in some cases. Under Montana’s “insurance exception,” an insured forced to assume the burden of legal action to obtain the full benefit of the policy may recover attorney fees (Mountain West Farm Bureau Mutual Insurance Co. v. Brewer, 2003 MT 98).
- Punitive damages where the insurer acted with actual fraud or actual malice, proved by clear and convincing evidence (§ 27-1-221, MCA). Montana usually bars punitive damages in contract cases, but the statute expressly allows them in an action arising under § 33-18-201. Punitive damages are capped at $10 million or 3% of the defendant’s net worth, whichever is less (§ 27-1-220, MCA).
How long do you have to bring a bad-faith claim in Montana?
| Claim | Deadline | Source |
|---|
| UTPA claim by a policyholder | 2 years from the date of the violation of § 33-18-201 | § 33-18-242(8)(a), MCA |
| UTPA claim by a third-party claimant | 1 year from the settlement of, or entry of judgment on, the underlying claim | § 33-18-242(8)(b), MCA |
| Breach of a written insurance contract | Generally 6 years, subject to the policy’s terms and the facts | § 27-2-202(1), MCA |
| Underlying injury claim against an at-fault person | Generally 3 years | § 27-2-204, MCA |
The 2-year clock for policyholders runs from the violation, not from the end of the claim. An insurer that unreasonably delays a claim for a year has already used half of it. Policies can also impose their own notice and proof-of-loss requirements. Have a lawyer review the deadlines in your case early.
The Boland Aarab Way
We are trial lawyers, and we build every serious case as if it will be tried and then appealed. That matters in insurance cases, where the defense is well funded and the law is technical.
- We read the file. When an insurer broke the rules, we built the case on its own claim file: its notes, its timeline and its explanations. Our results include an insurance bad faith recovery of more than $800,000 and a $257,000 court order in a wrongful denial of insurance benefits case in Missoula.
- We protect verdicts. When a Phillips County jury’s verdict for a woman rear-ended by a pickup was thrown out, we took it to the Montana Supreme Court and had the $168,500 verdict reinstated (Voegel v. Salsbery, 2023 MT 137). See our full appellate record.
- We know federal court. Insurers based out of state often move cases to federal court. Our attorneys have handled more than 40 cases in the U.S. District Court for the District of Montana over the past nine years, and Samir Aarab has argued twice before the Ninth Circuit.
- We are part of the trial bar. Both of our attorneys are members of the American Association for Justice and the Montana Trial Lawyers Association. Caitlin Boland Aarab serves as an AAJ Governor and on the MTLA Board, and Samir Aarab is also a member of Public Justice.
- You work with the lawyers. The attorneys who brief and argue in Montana’s highest court handle your case from the first call.
Contact Boland Aarab PLLP for a free consultation at (406) 315-3737.
Where do we handle insurance bad faith cases?
We are based in Great Falls and handle insurance cases across Montana, including Great Falls, Billings, Missoula, Helena, Bozeman, Butte and Kalispell. Many bad-faith cases begin as injury claims; see our pages on car accidents and truck accidents.
Insurance bad faith cases across Montana
We are based in Great Falls and handle insurance bad faith cases statewide. Local information for each city:
Frequently Asked Questions
Is a denied claim always bad faith? No. An insurer may deny a claim that is not covered, and it is not liable under the UTPA if it had a reasonable basis in law or in fact for contesting the claim or its amount (§ 33-18-242(6), MCA). The question is whether the denial followed a reasonable investigation and fits the policy.
Can I sue my own insurance company in Montana? Yes. A policyholder may sue for breach of the insurance contract, for fraud, or under § 33-18-242, MCA, for violations of § 33-18-201(1), (4), (5), (6), (9) or (13). Punitive damages may also be available in the right case.
Can I sue the other driver’s insurance company? Yes, as a third-party claimant, but only after your injury claim is settled or a judgment is entered in your favor, and within 1 year after that (§ 33-18-242(7)(b), (8)(b), MCA). Before then, the insurer may still owe Ridley payments for clear medical bills.
What is a Ridley payment? An advance payment of an injured person’s medical expenses by the at-fault party’s insurer when liability is reasonably clear and the expense is reasonably clearly related to the accident (Ridley v. Guaranty National Insurance Co., 1997). The duty also covers reasonably certain lost wages (DuBray v. Farmers Insurance Exchange, 2001 MT 251).
Is a lowball offer bad faith? It can be. Montana prohibits neglecting to attempt a prompt, fair and equitable settlement once liability is reasonably clear, and compelling insureds to sue by offering substantially less than they ultimately recover (§ 33-18-201(6), (7), MCA). The offer has to be compared with the facts the insurer had.
Does bad faith apply to my UIM claim? Yes. An underinsured-motorist claim is a claim against your own insurer, so the first-party rules apply. Your insurer must investigate reasonably and cannot misrepresent your coverage.
Can I get punitive damages against an insurance company? Possibly. Punitive damages are allowed in an action arising under § 33-18-201 where the insurer acted with actual fraud or actual malice, proved by clear and convincing evidence, and are capped at $10 million or 3% of net worth, whichever is less (§§ 27-1-220, 27-1-221, MCA).
How long do I have to file an insurance bad faith lawsuit in Montana? Two years from the violation for a policyholder, and 1 year from the settlement or judgment on the underlying claim for a third-party claimant (§ 33-18-242(8), MCA). A breach of a written insurance contract generally has a longer period, but do not wait.
Talk to a Montana Insurance Bad Faith Lawyer
Contact Boland Aarab PLLP for a free consultation at (406) 315-3737.
Our attorneys: Caitlin Boland Aarab · Samir F. Aarab
Sources: § 33-18-201, MCA · § 33-18-242, MCA · § 27-1-220, MCA · § 27-1-221, MCA · § 27-2-202, MCA · § 27-2-204, MCA · Ridley v. Guaranty National Insurance Co., 286 Mont. 325, 951 P.2d 987 (1997) · DuBray v. Farmers Insurance Exchange, 2001 MT 251 · Mountain West Farm Bureau Mutual Insurance Co. v. Brewer, 2003 MT 98 · D’Hooge v. Cincinnati Insurance Co., 2026 MT 63
Disclaimer: This article is for informational purposes only and does not constitute legal advice. Reading it does not create an attorney-client relationship.
