What Is the Arizona Unfair Claim Settlement Practices Act?
The failure of an insurance company to handle a claim fairly and in accordance with good-faith business practices is so common that many states, including Arizona, have passed laws that specifically ban these behaviors. One of these laws in Arizona is the Unfair Claim Settlement Practices Act. This law protects you as a claimant by prohibiting insurance companies from engaging in many specific types of bad-faith practices.
What Is Insurance Bad Faith?
Insurance bad faith refers to an insurance company that acts unreasonably or not in a good-faith attempt to resolve a client’s claim. An insurer may knowingly handle a claim in bad faith in an attempt to save the company money. Arizona auto insurance bad faith, for example, is a car insurance company intentionally mishandling a car accident claim in an effort to diminish the victim’s payout and protect the insurer’s profitability.
Insurance bad faith can refer to many different actions or failures to act committed by an insurance company or one of its representatives. Common examples include delaying the processing of a claim without a valid reason, requesting too much evidence or information from a claimant, failing to properly interpret the language of a policy, and denying a valid claim. Any action or behavior by an insurance company that is not performed in an honest or good-faith attempt to resolve the claim can constitute bad faith.
How Does the Unfair Claim Settlement Practices Act Protect You From Bad Faith?
The Unfair Claim Settlement Practices Act is found in Arizona Administrative Code Section 20-461. This law provides 19 specific examples of practices that an insurance company cannot commit or perform with enough frequency as to constitute a general business practice. Although the law in Arizona states that a jury cannot use this Act for instructions during a bad faith case, it does provide standards for insurer conduct while processing claims. Some of the forbidden practices listed in the Act are:
- Misrepresenting material facts, terms or provisions relating to policy coverage.
- Failing to respond reasonably and promptly to a claim that has been filed.
- Denying a claim without conducting a reasonable investigation.
- Delaying an investigation or the payment of a claim by requiring extraneous information from the claimant.
- Taking an unreasonable amount of time to approve or deny the coverage of a claim.
- Not offering a fair and equitable settlement in a good-faith attempt to resolve a claim where liability is reasonably clear.
- Attempting to settle a claim for less than what a reasonable person would believe he or she was entitled to receive.
- Pushing policyholders to file lawsuits to recover amounts that are due to them under the policy.
A widely used test to determine if an insurance company is acting in bad faith during an Arizona claim is whether the insurer acted unreasonably and knew or was conscious of the fact that it was doing so during the investigation, evaluation or processing of a claim. As a claimant, it can be difficult to apply this test to your own situation, however. Understanding the Arizona Unfair Claim Settlement Practices Act can make it easier to detect bad faith and take action to protect yourself.
What to Do if Your Arizona Insurance Provider Mishandles Your Claim
If you believe that you are a victim of insurance company bad faith during any type of claim in Arizona, protect your rights by hiring a lawyer without delay. A bad-faith insurance lawyer can help you fight back, such as by appealing a wrongful claim denial. A lawyer can also represent you during a bad-faith lawsuit against the insurance provider, which could result in additional financial compensation. Your lawyer may be able to reference the Arizona Unfair Claim Settlement Practices Act during your lawsuit to illustrate a specific example of bad faith and support your claim.