When Bad Faith Applies,
You’re Better Off.

You Are Better Off When Insurance Bad Faith Applies

Under Arizona’s Fair Claims Practices Act, insurance companies or their agents are prohibited from engaging in any of the following practices:

• Misrepresenting important facts, insurance policy provisions, or the governing law relating to the coverage at issue.
• Failing to act reasonably and in a timely manner in their communications regarding claims.
• Failing to conduct a reasonable investigation in light of the available information.
• Failing to make a claim decision within a reasonable time after proof of loss has been submitted.
• Not attempting in good faith, to reach fair, prompt, and equitable settlements in claims where liability is reasonably clear.
• Failing to promptly provide a reasonable explanation for the denial of a claim, which should include citations to pertinent policy provisions.
• Changing the terms of a policy without notification or imposing terms not provided for in the policy.
• Forcing a claimant to file a lawsuit to obtain benefits.

WHAT YOU NEED TO KNOW ABOUT INSURANCE BAD FAITH:

Some bad faith insurers will boldly lie and tell you your claim is governed by ERISA when, in fact, it is not.

Bad Faith Also Applies If:

The Act does not provide claimants a private right of action for violation of the Act, but the prohibited conduct is illustrative and may rise to the level of bad faith. The insurer continues to be bound by the duty of good faith and fair dealing even after you file a lawsuit to recover disability benefits. In our experience, insurance companies sometimes go to extreme lengths to deny valid claims and engage in multiple bad acts, which often continue during litigation; the examples above are not exhaustive by any means.

Some bad faith insurers will boldly lie and tell you your claim is governed by ERISA when, in fact, it is not. They do this because your rights and the remedies for insurance bad faith under Arizona law are far broader than those that ERISA provides. Generally, ERISA limits to you equitable remedies. Typically these include benefits owed to you and attorney’s fees. But an insurer’s breach of the duty of good faith and fair dealing permits legal remedies including extra-contractual damages, such as compensation for pain and suffering, emotional distress, or economic losses suffered as a consequence of the insurer’s acts of bad faith. In extreme cases, an insurer can even be liable for punitive damages.