Insurers and “Bad Faith” in Injury Cases
Insurance companies must act in ‘good father’ and ‘deal fairly’ with their policy holders. It is for this reason that many Arizonians have continued to pay their insurance premiums for years in hopes of complete financial security when the unexpected happens. Unfortunately, insurance bad faith, also known as “insurance fraud,” is a fairly common occurrence. According to the Arizona Supreme Court, and as shown through Noble v. National American Life Insurance Company, there is an implied duty in all insurance contracts that the insurer must act in good faith when handling the claims of the insured.
In a perfect world, the insurer would comply to a claim, investigate the situation, and provide an honest and reasonable settlement to the insured. However, some insurance companies seek to save money by not paying the insured the full amount dictated by the insurance contract. In other cases, some insurers downright deny the insurance claim without proper evidence backing the denial.
Despite rules and regulations, insurance companies still take advantage of policy holders, and with a team of lawyers and vast financial resources, these companies can often provide a profound defense to avoid policy claims.
Signs of Bad Faith Insurance Settlement Practices
Because insurance consumers hold their insurers to a high esteem, which is in part due to the rigorous state laws imposed on insurers, it can be quite difficult to notice if the insurer is acting in bad faith. In many cases, proving bad faith policies can be quite complex. Therefore, if a policy holder may be questioning his/her insurer’s decision or settlement, or if there is a strong indication that the insurer is acting in bad faith, then it is crucial to acquire legal counsel right away. An attorney experienced in insurance bad faith claims will know exactly what to look for and how to start building a case.
Some common signs of insurance bad faith can include:
- Insurer delays, discounts, or denies payment without basis
- Insurer fails to acknowledge and reply upon notification of a covered claim
- Insurer fails to pay a covered claim while maliciously conducting an incomplete investigation
- Insurer attempts to settle a claim for less than an accurate and objective amount
- Insurer settles claims on the basis of an application or policy that was altered without notice
In essence, the best way to determine bad faith settlement practices is to consider the behavior of the insurance company. Bad faith insurers tend to unlawfully look for (and find) ways to not pay, delay, deny payment of claims, or diminish the settlement amount.
Do You Have a Claim?
According to Wisconsin Supreme Court’s decision in Anderson v. Continental Insurance Co., which the Arizona Supreme Court relied upon for its decision, the definition for bad faith is as follows:
“The tort of bad faith can be alleged only if the facts pleaded would, on the basis of an objective standard, show the absence of a reasonable basis for denying the claim, i.e. would a reasonable insurer under the circumstances have denied or delayed payment of the claim.”
Knowing whether insurance bad faith has occurred therefore requires a profound understanding of insurance practices as well as the common tactics that these companies use to avoid paying claims.
Damages Involved in an Insurance Bad Faith Case
In addition to leaving a policy holder without the financial means, insurance bad faith cases can present several other financial and emotional damages. In the past, one of the primary damages that occurred in a bad faith claim was a breach of contract. With the adoption of the tort of bad faith, however, damages go far beyond breach of contract. In Arizona, for example, the extra attorney fees required to pursue a bad faith claim are entirely recoverable as an item of damage.
Emotional distress is a common damage awarded in bad faith claims, but proving emotional distress can be a little tricky. In this situation, the insured must prove that the bad faith resulted in a direct invasion of property rights. Invasion of property rights can include pain, humiliation, inconvenience, and even pecuniary losses for expenses such as attorney’s fees.
Victims of bad faith can potentially receive punitive damages in tort actions, but not when the bad faith only occurred with a breach of contract.
What to Do Next?
No matter if it’s disability, health insurance, life insurance, business insurance, or any other valid claim under a policy, it is essential to hold insurance companies responsible for these unethical tactics and receive a full compensation plus damages from the insurer.
Because of the complexities in proven bad faith and the vast financial resources some insurers have for their defense, it is important to avoid contacting the insurance company and accusing the insurers of bad faith without the counsel of an attorney.
If you or a loved one was victim of insurance bad faith practices, we invite you to give us a call at (480) 502-0708 or send us a message for a free initial consultation.