Firm-Wide blog

Courts Crack Down On Insurers Acting in Bad Faith

By Burg Simpson
February 19, 2018
3 min read

In a refreshing bit of news for consumers, courts – and juries – are increasingly holding insurance companies responsible for their bad behavior. Consider that just last month:

  • The U.S. Court of Appeals for the Eleventh Circuit in Atlanta reversed a lower court ruling that dismissed a $2.7 million bad faith claim against Geico for failing to settle a claim.
  • A Florida jury ruled against Mercury Insurance Co. to the tune of $8 million for acting in bad faith for not adequately defending their client.
  • The Indiana Court of Appeals reinstated a lawsuit against State Farm for acting in bad faith by lowballing a settlement offer with one of its clients.

Arizona is not immune to this trend. In 2012, to name just one example, the Arizona Court of Appeals ruled in Nardelli v. Metro Group Prop. And Cas. Ins. Co. that insurance companies possess “some obligation” to educate policyholders about their rights. That case resulted in a verdict in excess of $55 million.

If you believe your insurance company is not treating you fairly, do not let them walk all over you. Speak with a Phoenix personal injury lawyer who can help protect your rights.

Insurance Companies Must Act in Good Faith

All too often, insurance carriers bend over backward to avoid paying a claim. Nevertheless, Arizona law dictates that insurance companies must act in good faith by:

  • Conducting timely and adequate investigations into claims.
  • Acting reasonably when evaluating claims.
  • Pay claims quickly once they are deemed valid.

Although, just because your insurance company denied your claim does not mean that they are acting in bad faith. To prove a first-party bad faith claim, according to the State Bar of Arizona, the plaintiff must establish:

  • The insurer intentionally denied the claim/failed to pay the claim/delayed payment of the claim without a reasonable basis for such action; and
  • The insurer knew that it acted without a reasonable basis, or failed to perform an investigation or evaluation adequate to determine whether its action was supported by a reasonable basis.

It is important to note that the plaintiff does not have to prove that the insurer intended to cause harm. However, the plaintiff must prove:

  • The insurer breached the duty of good faith and fair dealing.
  • The insurer’s breach was the cause of damages; and
  • The amount of damages.

Finally, Arizona law states that insurance companies must “give the same consideration to its insured’s interests as it gives to its own when it considers a settlement offer. The test for evaluating whether an insurance company has given equal consideration to the interests of its insured is whether a prudent insurer without policy limits would have accepted the settlement offer.”

What Could You Be Entitled To?

If you’ve been the victim of an insurance company acting in bad faith you could be entitled to damages that include:

  • The total of benefits you were denied.
  • Any financial losses you have incurred as well as potential future losses.
  • Compensation for emotional distress.
  • In egregious cases, punitive damages are possible.

Do not try to fight an insurance company by yourself. They have attorneys whose only job is to save the insurance company as much money as possible. You need an Arizona personal injury attorney to fight for you. Call Burg Simpson in Arizona at 602-777-7000 or fill out a Free Case Evaluation Form so we can discuss your claim.

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