Insurance denied in Arizona What happened next

Have you ever been left puzzled by an insurance company’s denial of your claim, questioning the fairness of their decision? This is a common issue faced by many across Arizona. Understanding the law is crucial in navigating these situations. This article will explore a landmark court ruling, offering guidance on resolving such disputes effectively.

Situation

Specific Circumstances

In Arizona, a married couple, James and Phyllis Martin, as well as other policyholders, decided to challenge State Farm Mutual Automobile Insurance Company. They were upset because State Farm wouldn’t let them “stack” their insurance coverage. Stacking means combining different insurance coverages to get more money for a single accident. For example, if you have two cars with separate insurance policies and get into an accident, stacking could let you use both policies to cover the costs. State Farm’s policy said this wasn’t allowed, but the Martins and others thought this rule wasn’t fair according to Arizona law. They believed the insurance policy language was confusing and didn’t follow the rules.

Plaintiff’s Argument

The plaintiffs, including the Martins, claimed that State Farm was acting unfairly by not allowing stacking. They said the policy language was confusing and didn’t match Arizona’s laws that allow restrictions on stacking only if the policy clearly explains it. The Martins believed that State Farm knew or should have known that their rules weren’t valid, especially after a similar court case set a new standard.

Defendant’s Argument

State Farm argued that their decision not to allow stacking was based on what they thought was a correct reading of the law before the court made a new decision in a related case. They said their policy was written to follow Arizona laws, and they genuinely believed their interpretation was right. State Farm also didn’t want to share certain documents, saying they were protected by attorney-client privilege, which means private conversations between them and their lawyers shouldn’t be shared.

Judgment Outcome

The court sided with the plaintiffs. It determined that State Farm had given up its attorney-client privilege without explicitly saying so. This was because they used the legal advice they received as part of their defense. So, the court required State Farm to share documents and communications that were previously kept private. This ruling meant that the Martins and other plaintiffs could see if State Farm acted in bad faith. The case number for this ruling is CV-99-0407-PR.

Resolution Solution

Immediate Actions

If you find yourself in a similar situation, the first thing you should do is gather all your policy documents and any communication with your insurance company. This will help you understand your current coverage. Check if your policy has any language about stacking and see if it aligns with state laws. If you’re unsure, consider consulting with a legal expert who knows insurance law in your state.

Filing a Complaint

If you believe your insurance company is acting in bad faith, you may need to file a legal complaint. This involves drafting a legal document that outlines your case against the insurance company. You’ll need to provide evidence of why you believe the insurance company’s actions are unfair or illegal. This might include policy documents, correspondence, and any legal precedents that support your case. It’s often helpful to work with a lawyer to ensure your complaint is comprehensive and well-structured.

Negotiation and Settlement

Before rushing to court, consider trying to negotiate with the insurance company. Sometimes, disputes can be settled through mediation, which is a less formal process where a neutral third party helps both sides reach an agreement. If you have strong evidence that the insurance company is wrong, they may prefer to settle rather than go to court. Discussing possible settlements with a lawyer can give you a clearer picture of what to expect and how to proceed effectively.

FAQ

What is bad faith?

Bad faith occurs when an insurance company does not fulfill its obligations to policyholders, such as denying a claim without a good reason or not investigating a claim properly.

What is stacking?

Stacking is when you combine the coverage limits from multiple insurance policies to get a higher payout for a claim. This is often used in cases involving underinsured or uninsured motorist coverage.

What is attorney-client privilege?

Attorney-client privilege is a rule that keeps communications between a lawyer and their client private. This means that what you tell your lawyer in confidence can’t be shared without your permission.

Is advice of counsel a defense?

Yes, advice of counsel can be used as a defense. It means that a party acted based on the legal advice they received. However, using this defense might result in waiving attorney-client privilege.

How is privilege waived?

Privilege can be waived if a party voluntarily shares privileged information or if they make that information an important part of their legal argument.

What is A.R.S. § 20-259.01(H)?

A.R.S. § 20-259.01(H) is an Arizona law that lets insurance companies include specific language in their policies to prevent stacking, but only if they meet certain requirements.

What is A.R.S. § 13-2301(D)?

A.R.S. § 13-2301(D) defines certain illegal acts, including fraud, which can be important in insurance claim disputes.

What is implied waiver?

Implied waiver happens when someone’s actions suggest they’ve given up a right, like attorney-client privilege, even if they haven’t said so directly.

How is bad faith proven?

To prove bad faith, you need to show that the insurance company unreasonably denied your claim, didn’t investigate properly, or didn’t meet their contractual obligations without a good reason.

What does this case mean?

This case explains when attorney-client privilege might be waived, especially if a company’s decisions are based on legal advice and become a key issue in a legal dispute.