MoneyInsurance claim denied
Insurance claim denied or lowballed in Arizona
An insurance policy is a contract, and in Arizona every insurer owes its policyholder a duty of good faith and fair dealing on top of it. Since Noble v. National American Life Insurance Co. (1981), an insurer that denies, delays, or underpays a claim without a reasonable basis, knowing or recklessly disregarding that it has none, can be liable in tort for bad faith, not just for the policy benefits. That covers homeowners, auto, disability, life, and many health claims. A bad faith claim generally must be filed within two years under A.R.S. § 12-542, and the policy itself may set shorter notice and suit deadlines. If a denial letter does not square with your policy or the facts, you may have a claim.
What Blueshoe does
The groundwork, in order, before you decide anything.
- 01
Read the denial against the policy
The letter, the policy language it cites, the exclusions it leans on, and whether the stated reason holds up on your facts. Blueshoe marks where the denial and the policy disagree.
- 02
Build the claim file
Every call, adjuster name, date, estimate, photo, and report, plus what the insurer asked for and when you sent it. Delay and unreasonable handling are proven from the log, so the log is built first.
- 03
Draft the response
A written demand that answers the stated reason, supplies what is missing, and asks for the claim file and the basis for the decision, with a complaint to the Arizona Department of Insurance and Financial Institutions where it helps.
- 04
An attorney can take it forward
A licensed Arizona attorney can review the file, present the demand, and bring the contract and bad faith claims if the insurer will not pay what the policy owes, on terms stated in writing first.
What the law says
What the law says about insurance bad faith in Arizona
What is insurance bad faith in Arizona?
A tort, not just a broken contract. Since Noble v. National American Life Insurance Co. (1981), Arizona insurers have owed policyholders a duty of good faith and fair dealing. Denying or delaying a claim without a reasonable basis, knowing or recklessly disregarding that it has none, breaches that duty and supports a claim for damages beyond the policy benefits.
What counts as bad faith, and what is just a disagreement?
An insurer may dispute a claim it has a fair reason to question; that is a coverage dispute, resolved under the contract. Bad faith is the unreasonable handling: ignoring evidence, failing to investigate, misreading the policy against you, delaying payment to pressure a discount, or lowballing a loss its own adjuster valued higher. The claim file usually shows which happened.
How long do I have?
A bad faith claim is a tort claim and generally must be filed within two years under A.R.S. § 12-542, usually measured from the denial. The claim for the policy benefits themselves is a contract claim with its own period, and many policies add their own notice and suit-limitation clauses, so have the policy's deadlines read alongside the statute's.
Keep the denial letter and its envelope or email header. The date on it is where the clock is usually measured from, and the reason it states is what the response has to answer.
What can I recover?
The benefits the policy owed, plus the consequential losses the denial caused: a home repair that got worse while unpaid, medical care put off, and in appropriate cases emotional distress. Where an insurer's conduct was aggravated, Arizona law allows punitive damages. In a contract action, A.R.S. § 12-341.01 also lets a court award attorney fees to the successful party.
Does this apply to my health plan or a disability policy?
Often, with one exception. Policies you buy yourself, including individual health, disability, and life coverage, are subject to Arizona bad faith law. Employer-sponsored plans are generally governed by the federal ERISA statute, which preempts state bad faith claims and replaces them with an internal appeal and a federal review, on its own deadlines. Which regime applies is the first question.
What it costs
No fee unless you recover.
Asking costs nothing. If you engage Blueshoe on a contingency basis, the fee is a percentage of what is recovered, stated in a written engagement agreement, and nothing is owed if there is no recovery. Case costs, such as filing fees and records, are set out in the same agreement, including whether they come out before or after the fee is calculated. The statutes behind these claims also let a court order the other side to pay a prevailing consumer's attorney fees, so often no fee is owed by the client at all; the written agreement states how a fee award and the contingency percentage interact.
- Free to ask
- Written assessment before any fee
- Engagement terms in writing
- No billable hours
Questions people ask
Be careful. Many settlement payments come with a release, and cashing a check marked as full and final can end the claim. Payment of an undisputed part of a loss, with the dispute reserved in writing, is a different thing. Have the paperwork read before you deposit anything.
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Legally reviewed by Catherine O’Grady, State Bar of Arizona No. 011647
Managing partner & chief compliance officer · 30+ years in practice · Reviewed 2026-10-08 · Full bio →