Sedona Insurance Law Blog

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. 

Insurers often have legitimate reasons to deny claims

While the focus of this blog is bad faith insurance, it is important to also realize the other side of the coin: insurers are often justified when they deny a claim. It may feel like they are acting in bad faith, but in reality they are acting well within their rights.

So what are some common reasons that an insurer denies a claim? Let's look at a few, in the context of life insurance:

Why you need an attorney in insurance bad faith

Insurance law is very complicated. Proving that your insurance company treated your claim with bad faith usually involves careful investigation of the insurance policy, the paper trail and the relevant statutes. Without an attorney with plenty of experience handling insurance bad faith litigation, you are going to have a hard time proving even a seemingly open-and-shut case.

In an example of a case from outside of Arizona, the Texas Supreme Court has laid out five rules for insurance bad faith cases that involve a specific set of circumstances. In the underlying case, a homeowner successfully sued USAA Texas Lloyds for refusing to pay her claim following Hurricane Ike.

Is there a difference between insurance deceit and bad faith?

An insurance company can deprive you of your rightful coverage without acting in bad faith. Sometimes, people make mistakes. Of course, whether an agent accidentally fails to approve your proper claim or wrongfully denies your claim on purpose does not matter much when you are facing huge bills that insurance was supposed to pay for.

A subsidiary of Travelers Indemnity Co. is appealing a nearly $4 million verdict in a bad faith insurance lawsuit. The subsidiary, Charter Oak Fire Insurance Co., argues that its agents did not act in bad faith.

Typical ways an insurer commits an act of bad faith insurance

Bad faith insurance seems like a complicated legal topic, but conceptually it is very simple. Bad faith insurance occurs when an insurance companies fails to act in accordance with the laws to which they are bound and when they fail to uphold their clients needs under the implied covenant of good faith. More simply, bad faith insurance just means that an insurance company didn't follow through on the promises they made in your policy, or they acted in an illegal manner.

Based on this, what are some examples of actions or behaviors that constitute bad faith insurance on the part of the insurer? One classic example is that the insurer fails to follow proper protocol for an individual's claim. Perhaps they didn't fully investigate your claim, or they denied your claim without telling you why they came to that decision.

Does my homeowner insurance policy cover floods?

With the floods that recently hit Arizona, it is a good time to discuss homeowners insurance and what sort of water damage is covered.

If you assume that your policy will cover you if your house suffers flood damage, you had better double-check. Most policies do not include coverage for flooding.

Arizona Senate approves minimum auto insurance increase

If it becomes law, a new bill before Arizona lawmakers could raise the minimum auto insurance liability drivers must carry for the first time in 45 years.

The Arizona Senate passed the bill by a vote of 18-12 on Feb. 23. According to Mohave Daily News, the bill would require motorists to carry enough liability insurance to cover at least $25,000 in damages due to a single injury or death in a car crash, and $50,000 for multiple fatal or nonfatal injuries. Currently, the law requires $15,000 in coverage for injuries to an individual and $35,000 for multiple victims. These minimums have been in place since 1972.

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