Examples of bad faith insurance claims

Learn more about common examples of bad faith insurance claims by reading this article.

A bad faith insurance claim occurs when an insurance company wrongfully denies, delays, or otherwise improperly handles a valid insurance claim. An insurance company has a duty to act in good faith and fairly when dealing with its insureds. There are remedies when an insurer breaches this duty.

The following are examples of situations which may indicate that an insurer may be acting in bad faith. If you can identify with any of these situations, you may wish to contact a lawyer to discuss the specific facts of your case and learn of your potential remedies.

Delay in paying or processing your claim

It can take a long time before an insured is compensated under the terms of an insurance policy, but sometimes that delay is evidence of the insurance company's improper behavior. For example, if an insurance company promptly investigates a claim and receives the necessary investigative reports to determine coverage but waits up to a year to deny coverage, its failure to pay the claim when the necessary information became available may be proof of bad faith.

Similarly, if the insurer is taking an unreasonably long time to process a particular insurance claim, it may be acting in bad faith. If the insurer does not promptly act to verify the insured's proof of loss, investigate to determine coverage or obtain an appraisal of the value of the lost or damaged property, for example, the insurance company's delay in processing the claim may be proof of bad faith.

Inadequately processing or investigating your claim

Like a delay in processing a claim, an insurance company may act in bad faith by inadequately processing or investigating a claim. This can occur when a file is closed early without a thorough investigation or in the opposite situation in which the insurer is overzealous or intrusive in its investigation. If the insurance company has processes in place to minimize claim payments regardless of any one claim's legitimacy, this too may be bad faith.

Failure to provide or negligently handling your defense

It is common for insurance policies to contain provisions requiring that the insurer provide a defense on behalf of the insured in cases where a third party files a claim against the insured. If the insurance company fails to provide this defense or is negligent in hiring an inadequate or inappropriate attorney to defend the insured, for example, the insurer may have acted in bad faith.

Contact an Arizona insurance bad faith attorney today

An insurance company is a business. As such, they are focused on making a profit for its owners and shareholders. However, an insurance company also owes duties of fairness and honesty to its insureds who have suffered loss and submit claims. Because of this, an insurer cannot charge its claims department with the responsibility for making profit. Most of the premium income an insurance company receives is paid out in claims, consequently some insurers give in to the temptation to maximize profits by deciding to make the claims operation a profit center by planning to pay less on claims.

The Arizona and California law firm of Dawson & Rosenthal, P.C., represents insureds whose insurance claims have been wrongfully denied. Having an experienced insurance attorney from our firm is a good place to start if you feel you have been treated unfairly by your insurance company. Contact us today for more information by calling 928-282-3111 or 928-282-3111.