Sedona Insurance Law Blog

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.

Arizona House votes to allow discrepancies in policy cover sheets

An insurance policy is a contract. It is frequently quite long, printed in small type and full of dense, confusing language. Because insurance agents and insurers have a legal duty to make sure their clients understand the terms of their policy, usually when you sign up for a policy, you also get a cover letter that summarizes your coverage.

If some Arizona lawmakers get their way, insurers will not be obligated to put the truth on that cover sheet. Under a bill that passed the state House recently, the language of the policy itself would be all that counts, according to The Daily Courier.

Getting fair insurance value for your comic books

Most of us stopped collecting comic books once we became adults -- which might have been a big mistake. Though the market for rare and valuable comic books has varied over the years, some books are currently worth millions of dollars.

Because of this, many serious collectors insure their comic books in case of theft, loss or damage. When it is necessary for a collector to make a claim, how does the insurance company evaluate the value of a comic book?

Woman stuck with $31K bill due to 'junk' insurance

When an insurance company sells you a policy, it has an obligation to make sure you understand its terms. Misleading or dishonest statements or language in the policy could lead to a terrible shock when you try to submit a claim you think will be paid.

For example, a woman from outside of Arizona says she was the victim of a health insurance scam. She was hit with a $31,000 hospital bill because the insurance she bought was much more limited than the company led her to believe.

What to do after a bad faith insurance denial

After being denied a claim by your insurance company, it is natural to feel frustrated, confused and upset. If you suspect what happened to you goes beyond a simple denial into bad faith on the insurance company’s part, there are steps you can take to help build your case and seek compensation.

A recent article in USA TODAY has some useful tips for what to do after you believe you have been wrongfully denied an insurance claim. Here is a summary:

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