5 Ways Insurance Companies Can Wrong Their Clients

Even if you always pay your premiums on time and have been a loyal policyholder for many years, your insurance company may not support you when it comes time to process a claim. Insurance companies are known for doing what they can to diminish payouts – even if it means knowingly wronging a client. Look out for these five ways that insurance companies often try to take advantage of clients to protect your legal rights in Arizona.

Taking Too Long to Respond or Investigate

All insurance companies have a legal responsibility to respond to claims in a prompt and reasonable manner. Arizona law gives a specific deadline of 10 working days to notify a client of the receipt of a claim and 30 days to investigate (unless there is a valid reason to extend the investigative period). Dragging out the insurance process as long as possible, however, is in the insurer’s best interest.

Delaying the processing of a claim can mean less accurate evidence available to the client – or even a client who gives up and forfeits a payout. If an insurance company is taking an unreasonable amount of time to respond to your initial claim or complete its investigation, this may be a sign of insurance bad faith. This will give you the right to take legal action against the insurer.

Requiring Excessive Proof or Paperwork

Another way in which an insurance company can wrong a client is by requesting excessive or redundant information. This is a tactic used to delay the processing of an insurance claim or avoid paying the client altogether. For example, if you file a car accident claim after a crash and a car insurance company requests multiple forms that ask for essentially the same information, this could be an example of Arizona auto insurance bad faith. If you are asked for excessive information or proof of your losses, speak to an attorney right away.

Denying Valid or Legitimate Insurance Claims

Wrongful insurance claim denial is one of the most common forms of insurance bad faith in Arizona. Insurance companies are required to accompany claim rejections with a letter explaining the reason for the denial. If your claim was rejected without a valid reason or with no reason at all, this is a red flag that the insurer is trying to take advantage of you.

You can contest the claim denial by requesting an internal review by someone else at the insurance company. If this does not change the insurer’s decision, you can file a complaint with the Arizona Department of Insurance to receive a third-party review. Finally, you can bring an insurance bad-faith lawsuit against the company with assistance from an attorney if your claim is still being wrongfully rejected.

Misinterpreting Policy Language or Provisions

If an insurance company knowingly misrepresented the terms of a policy while selling it to you or misinterpreted its provisions while processing your claim, this is a sign of bad faith. Some companies intentionally use confusing or ambiguous language in their policy contracts so that they can interpret the policies differently once a claim is filed. It can help to have an attorney review your policy or insurance contract.

Offering Unreasonably Low Payouts

If you have a valid insurance claim, it is reasonable to expect a settlement offer that is appropriate for your injuries and the extent of your losses, as well as the maximums on your policy. If you receive an offer that a reasonable person would find low, this may be a sign that the insurer is not handling your claim fairly or properly.

Rather than accepting an absurdly low offer or rushing into a fast settlement, contact a Phoenix bad faith insurance lawyer for advice. An attorney can carefully review your insurance claim and let you know if you are a victim of insurance bad faith. If so, your lawyer can help you go up against an insurance company and demand maximum compensation. An attorney can protect you from an insurer that is trying to wrong you.