We Help the Victims of Bad Faith by Insurance Companies

At the Chernoff Law Firm, we help clients who have been let down, stonewalled, or low-balled by insurance companies.

Under Arizona law, the duty of “good faith and fair dealing” is implied in every contract.  Insurance companies are supposed to protect the people they insure.  But sometimes they’re more interested in saving themselves money than honoring their contracts.

That failure can give rise to a lawsuit for insurance bad faith. In such cases, the plaintiff may be able to recover an amount larger than the original value of the insurance policy.  Tort damages are available for breaches of that duty in specific contracts – including insurance contracts.

First Party Bad Faith

First party insurance coverage refers to contracts to pay benefits directly to the insured or the insured’s beneficiary. It also applies to an insurer’s duty to provide coverage and defend its customer.  This includes life insurance, auto insurance, homeowner’s insurance, title insurance, and other types of insurance coverage.

Under Arizona law, an insurance company is required to give as much consideration to its customers’ interests as it does to its own interests.

A first party bad faith tort claim might arise when an insurance company:

  • failed to pay a claim;
  • delayed payment of a claim; or
  • refused to defend its insured against a claim.

without a reasonable basis for that action.

The plaintiff must prove that the insurance company knew that it acted without a reasonable basis, or that it failed to perform an investigation or evaluation to determine whether its action was reasonable.

Damages in Bad Faith Actions

Damages in an insurance bad faith case can include:

  • the unpaid benefits of the insurance policy
  • monetary loss to the insured
  • emotional distress, humiliation, inconvenience, and anxiety — both past and future
  • punitive damages

Attorney fees may also be recoverable in bad faith cases.

Mistakes Aren’t Enough

It’s important to note that mere mistakes, bungling, and carelessness by an insurance company aren’t enough to support a bad faith action.

The Arizona Supreme Court said in the Rawlings case,

Papers get lost, telephone messages misplaced and claims ignored because paperwork was misfiled or improperly processed. Such isolated mischances may result in a claim being unpaid or delayed. None of these mistakes will ordinarily constitute a breach of the implied covenant of good faith and fair dealing, even though the company may render itself liable for at least nominal damages for breach of contract in failing to pay the claim.

Contact Us

We help clients in Phoenix, Scottsdale, and throughout Arizona with insurance bad faith claims.

When you’re ready to talk, we’re here to listen. Click here to arrange an initial consultation with one of our experienced litigators.