Insurance Bad Faith & Claim Disputes
Your insurer has to treat you fairly, reasonably and in good faith. When it does not, Arizona law gives you more than the policy.
At a Glance
- Bad faith is a separate claim
- Delay counts as much as denial
- Damages beyond the policy
Most people have never heard the phrase "insurance bad faith," and insurance companies are in no hurry to explain it.
What Is Insurance Bad Faith
Arizona law reads an implied covenant of good faith and fair dealing into every insurance policy. It is not printed anywhere in your paperwork, but it binds your insurer all the same: the company must handle your claim fairly, reasonably and in good faith, and give your interests as much weight as it gives its own.
Break that promise and the company has done more than breach a contract. Bad faith is a tort, a civil wrong, and it can entitle you to money on top of what the policy already owes you.
Not every denial is bad faith. Your insurer may disagree with you if it has a reasonable basis and it investigated properly first. The question is whether it had one, and asking costs you nothing.
What Bad Faith Looks Like
In 25 years of these claims, the same conduct comes up again and again:
- Silence. You call, you write, and nothing comes back.
- No real investigation. The damage is never properly examined, or it is examined only for reasons to say no, with your loss blamed on something other than a covered peril.
- Low-balling. The company's number is nowhere near what repairing or replacing your property actually costs.
- Needless adversarial hoops. Repeated recorded statements, an examination under oath, demands for documents that never existed, or being forced to appraisal or to suit to get what the policy already promised.
- Delay in payment. The loss is assessed, the amount is settled, and the money still does not arrive.
- Denial without a reasonable basis. A "no" the policy language does not support.
Misrepresenting what the policy covers, refusing to explain a denial, and refusing to make a reasonable offer when liability is clear belong on the same list.
Claim Disputes and Wrongful Denials
Many of our cases begin with the gap between two numbers: what you believe your claim is worth and what your insurer has offered. We handle disputes on every type of policy, including:
- wrongfully denied claims;
- delayed claims;
- valuation disputes;
- coverage disputes;
- denials blamed on wear and tear; and
- denials on the ground that your loss was "not a covered peril".
Every policy contains specific language setting out what each side owes the other, so we go through your policy and the claim file line by line. Your insurer has its own experts; we work with ours, including public adjusters, engineers and contractors who can value your loss properly.
The warning signs show up early: calls not returned, nobody coming out to the house or the business for weeks, no estimate. If your claim has already been denied, the next step is a hard look at the policy and the facts, and where the case is there, a suit for breach of contract and bad faith.
Payment Delays
A claim can be accepted in full and still go wrong. Insurers stall on the excuse that they are investigating or making a coverage determination while your repairs, your payroll or your medical bills wait.
In Arizona an insurance company must pay claims within a reasonable time, on every type of policy. What counts as reasonable depends on the loss, so we read the policy to work out when payment was actually due, then hold the company to it.
What Arizona law says
An insurance company owes a duty to act in good faith when handling an insured's claim. Noble v. National American Life Insurance Co., 128 Ariz. 188, 624 P.2d 866 (1981). The tort of bad faith also exists "when an insurance company intentionally denies, fails to process, or fails to pay a claim without reasonable basis for such action." Brown v. Superior Court, 137 Ariz. 327, 336, 670 P. 2d 725, 734 (1983). Failure by an insurer to promptly pay undisputed funds constitutes bad faith per se. Borland v. Safeco, 147 Ariz. 195, 709, P. 2d 276 (1985). An insurance company is required to give as much consideration to its insured's interests as it does to its own interests. Rawlings v. Apodaca, 151 Ariz. 149, 157, 726 P.2d 565, 573 (1986). It "should not force the insured to go through needless adversarial hoops to achieve its rights under the policy. It cannot lowball claims or delay claims hoping that the insured will settle for less." Zilisch v. State Farm, 196 Ariz. 234, 995 P.2d 276 (2000).
What You Can Recover
A bad-faith case reaches past the claim itself. Depending on the facts, a recovery can include:
- the policy benefits you should have been paid in the first place;
- damages for the stress, anxiety, frustration and aggravation the company's conduct caused;
- out-of-pocket and out-of-house expenses you covered while the claim sat;
- interest; and
- in some cases, your attorney fees.
How We Help
Douglas F. Dieker has spent 25 years taking on insurance companies for Arizona policyholders, and he has never worked for one. He will read your policy, tell you plainly what he makes of the claim, and tell you if there is nothing here worth chasing.
The first consultation is free and you speak to Doug. If you hire us we work on a contingency basis: if we do not recover anything for you, you do not owe us a fee.
Talk to Us Before You Sign Anything
The first consultation is free and costs you nothing but the call. We meet clients throughout the Valley and all over Arizona, including evenings and weekends.