Bad Faith Law Protects Policyholders
Insurance company advertising usually promises that claims will be handled quickly and fairly. After all, a part of what you we buy is prompt attention.
Occasionally, however, an insurance company’s natural desire to minimize its expenses leads to unfair denial of a valid claim, including those for personal injury. In Arizona, that can now be very costly to the company.
State law permits a policyholder to sue his insurance company for its bad faith in dealing with the insured’s claims. The Arizona Supreme Court has ruled that an insurance company is obligated to act fairly and in good faith with its policy holders. The company may not safely take a position against those it has insured when a claim is presented.
An insurance company that violates this duty of good faith can be sued for an amount greater than the original claim submitted to the company for payment.
Policyholders submitting insurance claims may be in desperate financial circumstances. Some may have suffered a serious illness or injury, or may have been involved in an accident or fire. This economic hardship emphasizes the need for responsible and fair treatment from their insurance companies. The company’s failure to meet this responsibility may subject it to a penalty beyond the amount of the original claim.
The company also can be ordered to pay a policyholder’s attorney’s fees and court costs in a successful suit over bad-faith dealings.
Of course, not all denials of claims or delays in processing them suggest bad faith on the insurance company’s part. A reasonable time must be allowed for investigation and administrative tasks necessary for processing claims. However, when a company’s delays or claim denials become unreasonable, the policyholder now has a powerful weapon.
If you believe that your insurance company has failed to deal fairly with you, you should fine a complaint with the state Department of Insurance and consult with an attorney who is experienced in handling insurance matters, including personal injury lawyers.