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Auto Insurance Bad Faith

Auto insurance is big business, and because liability insurance is required of every car owner by law, it means big profits for the companies that write the policies. The more premiums they take in and the fewer claims they pay out, the greater the profits they generate. And profits are what the insurance business is all about.

Auto insurance bad faith refers to the failure of an auto insurance company to treat your claim in good faith and fair dealings. If you run into issues obtaining fair financial compensation from an insurance company after a car accident in Arizona, you may be a victim of bad faith. Contact an attorney from Surrano Law Offices to discuss your legal options. We can help you protect your rights and seek justice for auto insurance bad faith.

Arizona Car Insurance Claim Resources

Types of Arizona Auto Insurance Claims

As is the case in all 50 states, proof of financial responsibility is required of all motor vehicle drivers in Arizona. Drivers in Arizona must carry at least the minimum required amounts of automobile insurance. Arizona is a fault-based or tort-based insurance state, meaning all drivers must carry liability insurance to pay for the injuries and property damage of others involved in a crash. The required amounts of liability insurance in Arizona are currently $25,000 per person and $50,000 per accident in bodily injury insurance, as well as $15,000 in property damage liability insurance.

Other types of car insurance are also available, resulting in a total of six possible types of Arizona auto insurance claims after an accident:

  • Bodily injury liability insurance claim. A claim for injuries caused to someone else in an automobile accident
  • Personal injury protection (PIP) or medical payment claim. A claim for injuries caused to the policyholder. PIP is available in no-fault states, while med-pay insurance is available in fault states.
  • Property damage liability claim. Insurance to pay for the repairs that are necessary for the other driver’s vehicle, or the precrash value of a totaled car.
  • Collision insurance claim. A claim for damage to the policyholder’s own vehicle after a car accident, regardless of fault.
  • Comprehensive insurance claim. A claim for damage to the policyholder’s vehicle due to something other than a crash, such as a natural disaster or vandalism.
  • Uninsured or underinsured motorist claim. A claim for first-party insurance coverage when the at-fault party is illegally driving without insurance.

Understanding the types of car insurance that you have on your policy can help you determine your legal options after an accident. If you only have the minimum required amounts of insurance, for example, and you cause a car accident, you may not be eligible for coverage for your own medical bills or property damage repairs through your car insurance provider. You must purchase additional, optional types of insurance in Arizona for first-party coverage.

Why Auto Insurers Exist—from Their Perspective

If you’ve been laboring under the illusion that insurance companies exist to pay your damages when you’ve been injured by their insured, to protect you from liability claims filed against you, or to pay uninsured motorist claims when you’ve been injured by an uninsured or underinsured driver, being involved in a car accident may prove to be a wake-up call. Writing policies and banking the premiums is the easy part of the insurance business, but paying on claims is not what they do best. Paying claims digs into their profits. 

When an insurance carrier fails to pay a fair amount on a legitimate claim, the result can be a financial disaster for the injured. If they stall, deny or lowball a claim that deserves to be settled and the case goes to trial, resulting in a verdict against their policyholder that exceeds the value of the policy, their insured can be left responsible for the balance. These are examples of the harm that insurers do when an insurance company fails to act in good faith.

Insurance companies often get away with these tactics because so many people don’t realize that they are not powerless against powerful corporate insurance giants. In fact, when you have been a victim of an insurance company’s bad faith, you often have recourse and can force them to live up to their legal obligation to pay. In most cases, they will have to pay for your attorney fees on top of your damages. In some cases, you may even be awarded punitive damages as a punishment to remind them that acting in bad faith is unlawful, immoral, and unjust.

What Is Arizona’s Unfair Claim Settlement Practices Act?

Since insurance companies are for-profit businesses, many states have passed laws to help protect consumers. In Arizona, this law is called the Unfair Claim Settlement Practices Act. It outlines specific duties and responsibilities that insurance companies owe their claimants. It also dictates what an insurance company’s general business practices must look like. Here are some things that an insurance company cannot do under the act:

  • Fail to adopt reasonable standards for the prompt investigation of a claim.
  • Refuse to pay a claim without an adequate investigation of all available information.
  • Require extraneous information from the claimant, such as requesting the same information twice.
  • Fail to accept or reject a claim within a reasonable amount of time after receiving the proof of loss forms.
  • Fail to use good faith to effectuate a prompt, fair and equitable settlement of a valid claim.
  • Force a policyholder to go to trial to recover an amount that is due under the insurance policy.
  • Attempt to settle the claim for less than a reasonable person would be entitled to in the same situation.
  • Delay the investigation or the payment of a claim without cause.
  • Deny liability for a motor vehicle accident claim without reasonable investigation.

If an insurance company in Arizona commits any unfair claims settlement practices, it is referred to as insurance bad faith. Bad faith can give a car accident victim the right to file a civil claim against the auto insurance company for wrongdoing. You or your lawyer may be able to use the Unfair Claim Settlement Practices Act to demonstrate that an automobile insurance company has failed to treat your claim in good faith.

Examples of Auto Insurance Bad Faith

You might be a victim of auto insurance bad faith in Arizona if an insurance company is not handling your claim in a way that is fair, conscionable or reasonable according to the language of the policy. If the insurance company is using a different interpretation of the terms or provisions of your policy than were advertised, for example, this could be an attempt to save money on your claim. Common examples of auto insurance bad faith are:

  • Ignoring claims
  • Taking an unreasonably long time to investigate 
  • Low-balling, or offering an inadequate amount for a claim
  • Delaying the payout of a claim
  • Unreasonable blame-shifting
  • Refuting liability for a claim
  • Outright denial of valid claims 

These are just a few of the ways that many car insurance carriers attempt to keep their premiums safe within their coffers for the benefit of the shareholders who pay their salaries and bonuses. These nefarious tactics can create problems for those who are injured by their insured, by their policyholder who was injured by an uninsured driver, or for their policyholder who was at fault for an injury or wrongful death accident.

What You Need to Prove an Auto Insurance Bad Faith Claim

When you submit a civil lawsuit for insurance bad faith in Arizona, you are given the burden of proof. This is true of all civil lawsuits – the plaintiff, or filing party, has the burden to prove the claim that is being made. In an auto insurance bad faith claim, this means establishing that the auto insurance company is not handling your claim in good faith.

You and your lawyer are responsible for collecting and presenting evidence to establish insurance bad faith. This evidence must be clear and convincing enough to show that the insurance company is more likely than not guilty of bad faith (a “preponderance of the evidence”). Four key elements are necessary to prove an auto insurance bad faith claim:

  1. The insurance company had a duty or obligation to handle your car accident claim in good faith. Since all insurers owe a duty of good faith to the insured, this generally means proving that you were a party that was covered by the insurance company.
  2. The insurance company failed to fulfill its duty of care to you. There must be proof of a breach of duty, such as one of the above-listed examples of insurance bad faith.
  3. The insurance company’s reason for withholding benefits was unreasonable. The element of reasonableness is determined based on the specific facts of the case and what a reasonable insurance company would have done in similar circumstances.
  4. You suffered damages, or compensable losses, as a result of the insurance company’s unreasonable response to your claim. This may include financial losses or inconvenience.

To find out if you have the elements of an auto insurance bad faith claim in Arizona, consult with one of our attorneys for free. We will review your case to let you know if it has merit. If we decide to represent you, we can help you establish the required elements of proof using evidence that we collect against your auto insurance company. We are highly experienced insurance dispute lawyers who know how to build strong claims for our clients.

Potential Victims of Insurance Company Bad Faith

Bad faith or dishonest dealings by an auto insurance company can adversely affect many parties. If you are someone who suffered financial losses because of insurance bad faith in Arizona, you could be eligible for financial compensation through a bad-faith lawsuit. Depending on the state where the accident occurred, potential victims of insurer bad faith include:

  • Accident victims making liability claims
  • Holders of no-fault insurance, where applicable
  • Accident victims injured by a driver without adequate liability insurance, when they have Uninsured Motorist (UIM) Coverage
  • Holders of liability policies whose companies fail to settle a valid claim
  • Holders of liability policies whose carriers fail to adequately defend them against claims

To bring a bad faith action against an insurance company, whether it is your own company or the liability carrier for the car that injured you, you will need a very good attorney who limits his or her practice to bad faith claims. This is a specialized area of law and requires specific experience in pursuing claims against insurance companies, which can be notoriously difficult to prove. But with the right lawyer, you can require the company to do what they contracted to do when they wrote the policy.

Effects of Insurance Bad Faith

Insurance bad faith can interfere with an accident victim’s ability to pay for the medical care that he or she needs, leading to financial strain and related stress. It can also prevent the victim from obtaining financial compensation for necessary vehicle repairs, a rental car, or the costs of replacing a totaled car. Overall, insurance bad faith can make an already difficult process even more frustrating for an accident victim. It can have a long-lasting effect on the victim’s future and family, as well. This is why it is important to fight back with assistance from an experienced auto insurance bad faith lawyer.

Insurance Bad Faith Representation in Arizona

Surrano Law Offices in the Phoenix area exclusively handle insurance company bad faith claims and related legal actions when the company’s quest for profits stands between you and the just settlement of your valid claim. We handle these cases in Arizona, and some disability insurance bad faith cases in California, Nevada, and Kentucky. It’s all we do. With our experience on your side, you will have a fair shot at compelling the insurance company to act in accordance with their contractual responsibility to their policyholders and liability claimants. And in the worst cases, we may even obtain an additional award of punitive damages to discourage further acts of bad faith.

If you have been mistreated by a car insurance company in Arizona, call Surrano Law Offices today for a free case evaluation. (602) 264.1077