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Sedona Insurance Law Blog

What happens when an insurance company won’t pay?

Folks in Florida and Texas are dealing with the aftermath of property damage due to Hurricanes Harvey and Irma. Many people did not have flood insurance, and many did not have policies that will cover the total extent of the damage.

For those who do did purchase adequate coverage, will their insurance companies actually pay the claims, or will they delay or deny payments? Insurance companies are in the business of making money. One way to ensure they keep their profits is to deny claims, citing a variety of reasons.

Legal help necessary when bad faith tactics are used

The insurance system is an incredibly important one in our society. There are unexpected events that can happen that leave most people financially or physically unable to cope with the fallout. This is where insurance kicks in. The companies that provide insurance must step up as their policies dictate to cover their clients. This means that after the death of a family member with life insurance; or damage and injuries in the wake of a car accident; or devastation to a home due to a natural disaster; it is on the insurance companies to cover their clients.

However, this whole system of trust in insurance companies falls apart when the companies partake in bad faith practices, or they deny claims under dubious pretenses. Without that trust in place, the system collapses. Bad faith insurance is the root cause of this, and when it occurs, the victimized people need to hold their insurer accountable.

How to safeguard your bad faith insurance claim

When we purchase insurance, we do so with the expectation that if, and when, we need it, our insurance carriers will pay our claim. After all, we have made our payments—sometimes over many years—diligently and faithfully every month since we bought the policy.

We did so in good faith—and with every expectation that our losses would be covered in the event we ever needed them. So what happens when our insurance companies act in bad faith and deny our claim?

How will an insurer stall during legal proceedings?

We know that some insurance companies will go to extraordinary lengths to avoid paying otherwise legitimate claims, so it should not be surprising when they are less than ardent about answering discovery requests.

The process of discovery is very important when litigating insurance bad faith cases. Essentially, an aggrieved plaintiff is allowed to request information concerning the insurer’s guidelines with regard to responding to claims, its agreements with contractors investigating loss claims, information concerning loss ratios, as well as any other relevant information. 

Kanye West sues Lloyd's of London concert policy payment

Over the years, rapper Kanye West has generated controversy and headlines with public statements, his marriage to reality TV star Kim Kardashian, as well as his forays into the fashion world. For the most part, West appears unaffected by the public vitriol against him, but when stories about his alleged drug use are ostensibly being used against him by a concert tour insurer, West is fighting back.

West and his promotion company, Very Good Touring, have brought suit against insurer Lloyd’s of London for failing to pay out on a multimillion dollar policy to cover expenses and damages in the even West’s 2016 “Life of Pablo” tour was cancelled. 

Elements to prove in an insurance bad faith claim

Most consumers will agree that insurance companies are not the easiest entities to deal with, especially when it comes to evaluating and paying out claims. Despite the catchy commercials and musical jingles, consumers may not realize that insurers are in the business of offering coverage not just to be there when things go bad, they do so to make money.

Because of this, some insurers may take their own sweet time paying out claims. Even worse,  they may not provide all of the information necessary for a consumer in the midst of a lawsuit to make informed decisions, thus leaving them vulnerable to economic damages if a judgment is issued against the consumer. 

What consumers should know about bad faith insurance

Many of our readers have a basic understanding of bad faith insurance before having issues with their insurer. They may understand that insurers “should” act in good faith and deal with their customers in a fair and efficient manner.

While these attributes make for good customer satisfaction scores and could foster more business, some insurers address claims as if they would never be held liable for insurance bad faith. For the sake of our readers, this post will focus on the basics of insurance bad faith.

Helpful tips for dealing with potential bad faith insurance acts

Insurance is required for so many instances of our lives (i.e. home insurance, business insurance, car insurance) it should not be an arduous process to exercise our contractual rights under the policy. But remember, insurers are in the business of making money, so it is important to understand what can be done to protect one’s rights.

This post will highlight a few tips consumers should know about when processing insurance claims.

How a case for punitive damages can be proven

When an insurer refuses to provide benefits when it has a contractual obligation to do so, an insured may seek a breach of contract claim. While these types of claims are common, there is a separate claim reserved for an insurer’s actions (or lack of action), that rise to a level that can be considered unreasonable, and this type of claim is called insurance bad faith. Under Arizona law, punitive damages may be recovered with such claims.

Of course, additional evidence must be brought to show that the insurer’s conduct was reckless or outrageous.  This post will highlight some of the evidence necessary for a successful punitive damages claim.

Will your insurer be skeptical about neurological injuries?

If you have recently suffered a physical injury through an auto accident, it is probably easier to understand the limitations you currently have as well as the rehabilitation time expected. For instance, your doctor may suggest that you could go back to work in 4-6 weeks. However, if you are suffering from neurological conditions from a concussion or lyme disease, the healing period condition may not be so easy to predict. Because of this, some disability insurance carriers may not believe that your condition is actually genuine, or may compare the rehabilitation time of unrelated injuries to justify improper denials. 

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