When you buy insurance, you enter a relationship that Arizona law treats as special. Your insurer owes you a duty of good faith and fair dealing, an obligation to treat your interests with the same regard as its own. When an insurer breaches that duty, it can be liable not just for the benefits it owed, but for additional damages under Arizona's bad-faith law.
Your Insurer Owes You Good Faith
This matters most in claims against your own insurer, such as uninsured/underinsured motorist claims, where the company's financial interest is directly opposed to yours.
What Bad Faith Looks Like
Bad faith is more than a mere disagreement over value. It involves unreasonable conduct, denying a valid claim without a reasonable basis, failing to investigate properly, unreasonably delaying payment, misrepresenting policy terms, or lowballing a claim it knows is worth more. The hallmark is an insurer that disregards the legitimacy of a claim it should pay.
Arizona courts ask whether the insurer acted unreasonably and whether it knew or recklessly disregarded that its conduct was unreasonable.
The Damages That Follow
When an insurer acts in bad faith, the consequences can be significant. Beyond the original benefits owed, the policyholder may recover damages for the financial and emotional harm caused by the insurer's conduct. In cases of especially egregious behavior, punitive damages may be available to punish the insurer and deter similar conduct.
This potential exposure is precisely what is meant to keep insurers honest, and it gives policyholders real leverage when a company refuses to play fair.
Recognizing and Responding to Bad Faith
Keep careful records of all communications with your insurer, deadlines they miss, explanations they give (or fail to give), and offers compared to your documented losses. If your own insurer is denying, delaying, or lowballing a valid claim without a reasonable basis, you may have a bad-faith claim on top of your underlying one. A free review can assess whether your insurer has crossed the line.
Have questions about your own situation? Get a free, confidential case review. You pay no fee unless you win. Call 973-566-5599.
This article is for general informational purposes only and is not legal advice. For guidance on your specific situation, consult a licensed Arizona attorney.