How a case for punitive damages can be proven

When an insurer refuses to provide benefits when it has a contractual obligation to do so, an insured may seek a breach of contract claim. While these types of claims are common, there is a separate claim reserved for an insurer’s actions (or lack of action), that rise to a level that can be considered unreasonable, and this type of claim is called insurance bad faith. Under Arizona law, punitive damages may be recovered with such claims.

Of course, additional evidence must be brought to show that the insurer’s conduct was reckless or outrageous.  This post will highlight some of the evidence necessary for a successful punitive damages claim.

Policies and procedures regarding claim handling – It is essential to have as much information about the insurer’s policies and standard procedures for handling incoming insurance claims. Knowing how a claim is handled internally can help in establishing whether the insurer acted maliciously or in a fraudulent manner in processing the claim.

Activity notes in the claim file – The insurer must also keep records regarding how the adjuster on the file handled the claim. Such records would include statements and opinions on how the claim should be handled as well as the factual basis for decisions made on the claim.

Training documents – The insurer should also have documents or handbooks detailing how its adjusters are trained to handle claims. These documents could be used to establish that the insurer either systematically failed to train its adjusters or had no formal training for them at all.

There are other documents that an experienced insurance law attorney will need in order to establish a strong case for insurance bad faith that could lead to punitive damages. If you have questions, we invite you to contact us.