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What is the Statute of Limitations for Bad Faith in Arizona?

The state of Arizona imposes a general two-year statute of limitations on most personal injury and bad faith claims. While the state adheres to a statute of two years, your insurance contract may include a different agreement. Wronged policyholders must understand their policies to ensure the viability of a lawsuit.

Navigating the Arizona State Statute of Limitations

A major point of contention in statute of limitations arguments concerning civil claims is identifying when the clock started ticking. According to basic bad faith laws, the clock starts on the date the wrongdoing occurred. Unlike dating a slip and fall, you may not know exactly when your insurance company started taking advantage of you.

According to the precedent set forth in Thompson v. Property & Casualty Insurance Company of Hartford, the statute runs from the first coverage denial letter. A court may also determine that the first delay in a valid claim may constitute the first occurrence of wrongdoing. Assuming that the state statute takes precedence over any contractual obligations in a case, the plaintiff must identify the first date of wrongdoing and file a claim within two years of that date.

When Contracts Change the Statute of Limitations in Bad Faith Claims

In addition to basic state statute laws, your insurance policy may further complicate the recognized statute of limitations. If you agreed to a limitation clause in a car insurance, homeowner’s, life insurance, or other policy, you may not have a full two-year period to file a claim. The contractual agreement dictates when you must file. Most limitation clauses force potential plaintiffs to file a lawsuit within one year of the bad faith incident.

Contract Law and Bad Faith Law Statutes of Limitations in Claims

Bad faith occurs when insurers fail to honestly and appropriately handle a client’s claim. When adjustors tamper with witness testimony, inadequately investigate a claim, or lie to a claimant about rightful compensation, they are engaging in an act of bad faith. Bad faith is one thing and a breach of contract is another. Insurance cases can get complicated if a breach of contract issue arises alongside acts of bad faith.

If an insurance company fails to abide by the terms of the claim, your attorney may recommend filing a breach of contract claim. Under Arizona laws, a plaintiff can bring a breach of contract lawsuit within six years of the date of wrongdoing. A limitation agreement in your policy may also shorten the amount of time in which you may file a breach of contract claim. During the investigation, attorneys must determine if bad faith, a breach of contract, or a mixture of both created the loss you suffered.

How Your Attorney Can Help

Statute of limitations determinations are complex. Occasionally, the words used in a limitation agreement can trip up an insurance company. For example, an Indiana claim involved a policy with a limitation agreement that the policyholder would file a claim “within one year … or the shortest duration permitted under applicable law.” In this case, the court decided to enforce the state’s statute of limitations over the one-year limitation.

Depending on the severity and the degree of loss, a court may also choose not to enforce the terms outlined in a limitation agreement. Even if the policy remains valid under applicable laws, a judge may determine the insurer acted unreasonably and caused the plaintiff to miss the deadline for filing a lawsuit. In these cases, state law may take precedence over a contractual agreement.

To protect your right to a bad faith insurance claim in Arizona, contact an attorney who specializes in bad faith law as soon as you suspect wrongdoing. A claim delay, denial, or improper settlement offer based on incorrect evidence may all indicate an act of bad faith. Whether your insurance company breached its contract with you or acted in bad faith, an attorney can help you identify your legal options and act within the enforced statute of limitations.