Phoenix Insurance Bad Faith Law Firm
Phoenix Insurance Bad Faith and Underpayment of Claim Attorneys
The very nature of insurance is that you don’t file claims until something bad has happened. Property has been destroyed, you’ve become sick, injured or disabled, someone you love has died, there’s been a serious accident. . . . Every claim filed with an insurer represents bad news for the person filing the claim.
So what happens if—just as you really need the money the insurance company has promised to pay—the insurance company decides to give you more bad news? What happens when the insurance company
- Denies the claim without reasonable grounds?
- Ignores the claim by simply not responding and/or communicating?
- Delays its decision on the claim?
- Offers to pay considerably less than the amount you’re claiming?
- Makes you jump through hoops by repeatedly requesting more information before making a decision on your claim?
The “Good Faith” Requirement
The insurer has pretty much all the power:
- It wrote the language of the policy;
- It has already collected a considerable amount of your money in premiums;
- It keeps the money you claim until it subjectively decides that your claim should be paid.
You, on the other hand, have already committed to this insurance company. Once a loss has occurred, you can’t simply switch insurance companies and get your money from the new insurer. Courts eventually recognized how unfair this is. People and companies that purchase insurance certainly should be entitled to the protection for which they have already paid. So although the insurance contract said nothing about “good faith,” every insurance contract is deemed to imply that there is an obligation to act in “good faith.” Insurance companies that violate this implied obligation are guilty of acting in “bad faith.”
“Bad Faith” Today
In plain English, insurance companies can’t put their own financial interest ahead of the legitimate interests of the people who have been paying them for insurance coverage. Today, there are many different theories that allow insureds to recover damages from insurance companies that act in bad faith. In legal terms, bad faith actions can be characterized as (1) breach of contract claims, (2) tort claims; (3) claims for the insurer’s violation of the increasing number of statutes that specifically regulate how insurance companies handle claims, or generally provide consumer protection.
Damages for “Bad Faith”
The damages that the policyholder can get depend mostly on which of those theories is applied. Punitive damages may even be available. In any case, courts widely recognize that insureds who are victims of bad faith have to be able to collect more than just the amount that the insurer should have paid under the policy, in order to give insurers an incentive to act in good faith. In other words, an insurer would have nothing to lose by denying a claim for $100,000 in bad faith, if the most severe penalty it could face would be to pay the $100,000 it should have paid originally.
Your Rights Depend on State Law
For various reasons, insurance is an industry regulated almost exclusively by state law—there is no federal insurance agency. That means that your right to sue for bad faith, the legal theory on which you can sue, the actions of insurance companies that are considered to be “bad faith,” the damages you can collect if you win, and a thousand other details all depend on the law of the state that applies to your claim.
If you have been harmed by an insurance company’s bad faith, you need the help of attorneys who know the ins and outs of these cases in the state that will hear your case. And you need attorneys with a long, successful track record in winning bad faith claims. The team at the Surrano Law Offices in the Phoenix area is a leader in pursuing insurance bad faith claims throughout Arizona and, with co-counsel, in California, Nevada, and Kentucky. Our principal attorney, Charles Surrano, knows both sides of bad faith cases, having defending insurance companies against policyholder claims and investigated claims on behalf of the State of Arizona. If you feel you are a victim of insurance bad faith, call us today.