Not every state lets you sue for insurance bad faith

It may surprise our readers to learn that not everyone with homeowners’ insurance has the right to pursue a bad faith claim against the insurance company. Residents of Arizona, of course, are entitled to pursue a claim after their insurer rejects or lowballs a legitimate claim.

But a few states do not have a statute on the books that creates this cause of action. Among these states is New York, where a family has been left homeless by a house fire. Their insurance company denied their claim, because the family supposedly had an illegal apartment in their dwelling.

According to WABC-TV, an electrical fire destroyed the family’s house and left them with none of their belongings. They made a claim to their homeowners’ insurance company, but the company refused to make payment. It said the house was a two-family structure, but that the family had created a third apartment in the basement, which the family was not insured for.

The family denies they were renting out a third living space. They say that they have houseguests from time to time, often through the church the husband is a minister at. They are attempting to appeal the denied claim.

Here in Arizona, homeowners in a situation similar to the one described here have the option to take the insurance company to court once all other options have failed. Insurance companies acting in bad faith rob many homeowners of the ability to repair their homes after a disaster. But they can be held accountable.