If you’re like the majority of American families, your family’s single largest asset is your home. To protect your investment, you insure your home with a homeowner’s policy with the expectation that if anything happens to diminish the value of this valuable asset, the damage will be repaired or the structure replaced.
You may think that your insurance company exists to help families like yours repair or rebuild a damaged home. In fact, homeowner’s carriers, like all insurance companies, exist for the benefit of their investors, and their mission and reason for being is to generate profits. This is accomplished by selling a large number of policies and pulling in large amounts in premiums while paying out the very least possible in claims. Their interest in profits and you interest in security are at odds, and filing a claim may place you in an adversarial position with your homeowner’s insurance carrier. You need to repair your home so you and your family can pick up the pieces of your life after your home has been damaged; your insurance company sees every claim as a dent in their total profits, the financial return to their investors, and the bonuses they are able to pay to their executives.
Knowing this, you should not be too surprised if a prompt payment of your claim is not forthcoming. Many homeowner’s carriers will use any excuse to deny or minimize your claim. It is simply not in their best interest. Insurance adjusters are well trained in finding reasons to deny or diminish claims, or they may even ignore your claim altogether.
What Constitutes Homeowner’s Insurance Bad Faith
An insurance company has a legal obligation to deal with you fairly and in accordance with the terms set forth in your policy. These are some ways in which companies commonly try to avoid this obligation that may be considered acting in bad faith:
- Denying your claim without reasonable grounds;
- Extensive delays making a payment decision on the claim;
- Ignoring or failing to respond to your claim;
- Offering for a payment far below what is needed to repair your home;
- Repeatedly asking for more information, ordering more inspections, or insisting on additional interviews; or
Homeowners insurance bad faith can take many forms. Our attorneys have enough experience to recognize bad faith practices and take immediate action to protect the rights of the policyholder. If you believe your insurance company is taking advantage of you or trying to avoid a fair payout, contact us for a free consultation to find out if your case qualifies as insurance bad faith.
Legitimate Reasons to Deny a Homeowner’s Insurance Claim
When disaster strikes and you need your homeowner’s insurance, it is very disappointing when your claims are denied. But, there are legitimate reasons that your insurance may deny your claim. We will discuss some of these below.
A Lack of Insurance Coverage
There is no one-size-fits-all when it comes to insurance. No policy covers every imaginable disaster. Policies have exclusions, or you can be required to carry different types of insurance depending on the circumstances. Here are some examples:
- Wind and hail damage may require a separate policy
- Dangers like floods and earthquakes may also require a different policy
- If your insurance company does not specify coverage for a particular event, you can assume it will not cover it when the time comes.
Filing Deadlines are Ignored
Insurance policies require you to file a claim within a certain time after the damage to the home. The duration is typically between 180 days and one year. It will be denied if that deadline is overlooked, no matter how appropriate your claim is. If your home sustains damage, make an effort to get your claim filed as soon as possible.
Pay Your Insurance Premiums on Time
If you are behind on your insurance premium payments when disaster strikes, you may find yourself in a terrible position. By missing payments, your insurance policy can potentially lapse. When the policy lapses when an event occurs, when you are ready to file a claim, your insurance may not be responsible for the damages.
Staying on top of your insurance payments can keep your credit score looking good so that you do not suffer more expensive premiums in the future. If the insurance company thinks you are a responsible bet, you are more likely to be offered competitive premiums.
Nothing but the Facts
Do not be tempted to exaggerate the damages that occurred to your home. Adjusters will visit, and if they determine that you were lying about the repairs your home requires, your claim will most likely be declined. Be as detailed and factual as possible, and know that your insurance agent will find out if you aren’t. So, why take a risk?
Provide More Proof Than You Think You Will Need
The insurance company is not exactly thrilled to be paying for your home repairs. In fact, they would like nothing more than to find a way around paying them. So, it is imperative that you document everything. Take photos and videos, save receipts, and get estimates. In other words, provide so much proof that the insurance adjusters are not even tempted to decline your claim.
Without loads of evidence, the insurance company may reject your claim. Ensure that this does not happen by being thorough in your documentation.
Wear and Tear can Get Your Claim Denied
Homes experience wear and tear over the years. It happens. But, most insurance policies demand that your home be kept in good repair. When the adjustor comes out to check your home’s damage, if they find it was caused by a lack of maintenance or some sort of negligence on your part, your claim will undoubtedly be rejected.
Why Do I Need a Bad Faith Attorney?
It can be difficult enough to deal with an insurance company during a property damage claim when it is practicing in good faith. The claims process can be complicated and overwhelming. When the insurance company does not treat you or your claim fairly, it can be even more difficult to demand a positive outcome. A bad faith insurance company can be unpredictable, often with no clearly defined or valid reason to deny your claim or delay payout. It is important to hire a lawyer to protect your rights when dealing with suspected homeowners insurance bad faith. Otherwise, you could allow the insurer to take advantage of you.
A bad faith attorney can analyze your case and help you know the best next move. Your insurance company may need a reminder from an attorney that you have rights and will not tolerate bad faith practices. In some cases, intervention from an attorney is enough to turn things around. Your homeowners insurance provider may start to take your claim more seriously and correct bad faith practices, leading to a positive case resolution via settlement. In other cases; however, the lawyer may need to take the insurer to court to demand fair compensation.
Hiring a bad faith attorney gives you the ability to go up against large and powerful homeowners insurance corporations in Arizona. A lawyer evens out the balance of power between you and the insurer. If your case has to go to trial to resolve, your lawyer can handle the legal process on your behalf. Your attorney can help you understand your statute of limitations, evaluate the severity of your losses and demand good-faith actions from the insurance company. Hiring a lawyer can improve your odds of obtaining the compensation you need to move forward.
How Can a Bad Faith Claim Denial Impact You?
If your insurance denies your claim, even a very valid one, and acts in bad faith, it can still impact you negatively. It is unfair, but it still happens. Insurance companies adjust your premiums based on the knowledge they have about you.
So, this does not work in your favor if you have submitted a claim. The insurance company knows you are willing to submit a claim, which is the opposite of what they want from their customers.
So, any time you call the claims department for a genuine claim, they record it, even if they do not pay you a dime. The company uses the record they created when you called to determine your premium, and if you have reported problems, they assume you will again. Sooner or later, they feel they may have to pay out, so they boost your premiums enough to cover that.
Damages from Bad Faith
In a bad faith claim with the help of a skilled attorney, you can potentially recover more than you were originally owed under the policy, including economic damages resulting from the insurer’s bad faith conduct, as well as compensation for inconvenience, stress, and attorney fees. In cases where your bad faith attorney can successfully demonstrate that the insurer intentionally put its interests ahead of yours, you may be awarded punitive damages, aimed at punishing the behavior and deterring the company from repeating it in the future.
What Is the Time Limit for Filing a Claim?
Like all states, Arizona has strict deadlines for filing civil claims – even insurance bad faith claims. No matter how significant your losses or how blatant the insurance company’s bad faith appears to be, you will only have a limited amount of time to bring your claim before the courts will refuse to hear the case. Each state has unique statutes of limitations on insurance bad faith claims. In Arizona, the general time limit is two years from the date you experienced bad faith from your homeowners insurance company.
In most cases, the two-year time clock starts ticking on the date the wrongdoing occurred. However, it can be difficult as a policyholder to know the exact date your homeowners insurance company started engaging in bad faith practices. In general, a judge will agree the statute of limitations on a bad faith claim will not begin until the policyholder receives his or her first letter denying insurance coverage. As a wronged policyholder, you will generally have two years from the date of your denial letter to file a civil claim.
Note, however, that you may have less time if your homeowners insurance company has policies in place that limit how long you have to file a civil lawsuit. Some insurance policies have contractual agreements that dictate deadlines for filing. If this is true for your policy, you or your lawyer must file by the date your insurance company says you must. It is common for insurance companies to use one-year deadlines for bad faith claims. Check your policy and consult with one of our attorneys for more information about your unique time limit for filing.
Experienced Counsel for the Best Outcome
At Surrano Law Offices, we focus our practice exclusively on insurance company bad faith, and because this is all we do, we have developed the highest level of competence in this specialized area and a have a long and well documented record of successful recoveries for our clients. We know insurance law and understand the goals of insurance companies and the methods they use to achieve them. We are able to put this knowledge and experience to use on your behalf. Call us to arrange a consultation, and we will advise you on the best course of action available. The initial meeting is free, and we will work out an easy payment arrangement or contingency agreement that works for you.