- posted: Sep. 01, 2015
- Insurance Law
We purchase insurance to protect us from many unforeseen and unwelcome possibilities, including vehicle theft. Lately, insurance companies seem to be investigating stolen car claims with additional scrutiny and increasing skepticism. This may very well be considered bad faith.
In 1981 Arizona adopted the independent bad faith claim. In Noble v. National American Life Insurance Company, the Arizona Supreme Court held there is an implied duty in all insurance contracts that the insurance company must act in good faith when handling the claims of its insured. This case granted an individual the right to sue their insurance company if that insurance company was acting in bad faith.
But what does it mean for an insurance company to act in bad faith? In Arizona, the insured must prove that the insurance company did not have a reasonable basis for denying a claim. In determining whether an insurance company acted in bad faith, a jury must decide whether the potential harm to the insured person outweighed any potential debatability of the claim’s validity.
An insurance company may commit bad faith by refusing or delaying payment to their insured for a stolen vehicle. It is now common that insureds are asked to jump through many hoops in order to prove they played no role in the theft of their own vehicle. Insurance companies demand multiple years worth of tax returns, employment records, cell phone records, bank accounts and more. The list is so exhaustive that it often takes many months before an insurance company is satisfied. By requesting a seemingly endless supply of personal documents, an insurance company is looking for the slightest shred of evidence that the insured was in dire financial straits and so arranged for the car to be stolen in order to collect money. As this is fraud, the insurance company will often deny the claim. Even if the claim is eventually paid, it often takes a year or more of investigation. This places an incredible hardship on an individual who has been without a car for such a long period of time.
As stakeholders continue to demand higher and higher profits from massive insurance companies, these companies continue to look for ways to reduce payouts to their customers. With this increased scrutiny, bad faith cases are surely set to rise in the next few years.
Claims against an insurance company are often considered both a contract and tort claim. This means that damages can be very large. Juries will often have no problem awarding substantial sums to someone they believe has been wronged when they know the money will come from a massive insurance company.
Contact the Rockafellow Law Firm today if you feel an insurance company is acting in bad faith.