We all pay insurance premiums expecting coverage when it is needed. While most insurance companies pay legitimate claims in a timely manner, not all do. In some cases, insurance companies deny legitimate claims wrongly, often with little or no investigation into the merits of a claim.
In some instances, they may “size up” the person making the claim and ascertain how badly the person needs the money. Then, they pay as little as possible, knowing that the person may be in a financially desperate situation.
In other instances, they may use other unscrupulous tactics or make up reasons not to pay. They may blame the event on the policyholder’s negligence, which is almost never a reason for not paying.
In Arizona, insurance companies are required by law to deal with policyholders in good faith. They must give the policyholder consideration at least equal to the insurance company’s own interests.
Often, however, because they directly keep every dollar that they avoid paying in claims, they will have a strong incentive to deny or “lowball” claims. Conduct that may constitute insurance bad faith includes:
Insurance bad faith is usually considered by a course of conduct that is particularly outrageous, egregious, or deliberate. In many instances it will be clear that an insurance adjustor has engaged in one or more of the actions noted above; often acting in a position of power over the policyholder, who may not understand the policy or who may be in desperate need of the payment.
It’s important to understand that insurance companies may have legitimate reasons for not paying a claim, including having a reasonable basis that the claim is not covered by the policy. While the insurance company may lose a coverage issue claim, this does not necessarily mean that it has acted in bad faith in originally denying the claim.
Any insurance policy is potentially subject to a bad faith claim, including:
Bad faith is a claim that is independent of the underlying insurance claim. Moreover, bad faith claims exist for the purpose of punishing insurance companies who act wrongly so that they will have a strong financial incentive not to act outrageously in how they treat other policy holders.
As an example, in a house fire, an insurance company may be liable to the owner for $25,000 in damages. If the company wrongly refused to pay what it owed and a jury determined that the insurance company was acting in bad faith, the jury could award whatever damages it believed to be appropriate to punish the insurance company.
If you believe that your insurance company has acted outrageously in treating your claim, please call us – we can then provide you with our insight into whether we believe that a case for insurance bad faith exists. In the interim, keep all correspondence you receive from the insurance company and carefully document your claim and the actions taken by the insurance company.
To learn more about the legal avenues for your case, please call us today at 602.254.6071 for a free initial consultation.
Schedule Your Free Consultation