Can I Sue My Insurance Agent for Their Mistakes?
An insurance claim is confusing enough without also having to deal with bad faith practices committed by the insurance company or one of its representatives. Bad faith means that an insurance company has failed to meet its obligation to process your claim in an honest, fair and good-faith attempt to resolve it properly. If your insurance agent in Arizona fails to fulfill any of his or her duties to you as the client or insured party, you may be entitled to sue the agent for financial compensation.
What Are an Insurance Agent’s Duties and Responsibilities in Arizona?
Insurance companies and their agents have a legal obligation to act in a certain way according to multiple state laws. Three of the top laws are the Unfair Claim Settlement Practices Act, the Arizona Administrative Code and Title 20 of the Arizona Revised Statutes. In addition, all insurance companies in Arizona are subject to an implied covenant of “good faith and fair dealings.” Some of the responsibilities that insurance agents have according to these laws are:
- To obtain the proper licensure by passing an insurance exam and completing the application.
- To recommend the appropriate insurance plan based on a client’s specific needs.
- To obtain any insurance policy that is specifically requested by a client.
- To notify the client of issues encountered when trying to obtain the coverage requested.
- To be transparent when representing the terms and provisions of an insurance policy.
- To explain the terms of the coverage that has been obtained to the client.
- To notify clients if the insurance company is having financial troubles, in some circumstances.
Not all adverse outcomes connected to an insurance policy are the fault of an insurance agent. Under state law, an insurance agent has a duty to act in a way that is reasonable and correct according to applicable standards of care. However, an agent does not have a responsibility to anticipate all of the risks that you may face and protect you from them. It may take a review from an insurance lawyer in Arizona to determine if your insurance agent made a preventable error.
What Are Common Examples of Insurance Agent Mistakes?
Despite an abundance of rules for what an insurance agent can and cannot do, many insurance agents in Arizona breach their duties of care, commit acts of bad faith and make preventable mistakes. If an insurance agent’s negligence or breach of duty causes harm to the insured – such as financial losses, inconvenience or legal fees – the insured can file a lawsuit against the insurance agent or company.
Your insurance agent may be acting in error or committing fraud if you notice any of the following red flags:
- Coverage on your policy that you did not request or consent to purchase.
- A policy that you purchased because it was advertised as a solution to your problem that you later discover does not cover your losses.
- A policy you purchased based on incorrect information or a material misrepresentation of facts.
- Collected premiums from you every month even though you do not have a policy.
- Pressure from an insurance agent to invest in something that you do not want.
- An insurance producer telling you or encouraging you to lie on your insurance application.
- Changes on your insurance policy that didn’t come with any warnings or communications.
Some of these may be honest mistakes – though that can still make the insurance agent legally responsible – while others constitute fraud. If you suspect that your insurance agent has fallen short of his or her legal obligations or duties of care that are owed to you as an insured party, contact an attorney in Arizona right away for a case review.
If you have grounds to sue the insurance agent for a mistake, an attorney’s assistance can be invaluable. Your lawyer can explain your legal rights, help you bring a claim against the insurance agent or corporation, and prove your claim using clear and convincing evidence. You can trust an attorney to advocate for your best interests throughout your entire case.