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Fraud Must be Defeated Even in the Face of Claims of Bad Faith 

https://zalma.com/blog

It has been said that where fear enters, reason flees. Doubt, with its  wavering in opinion and judgment, comes from a fear of the unknown. It  is an unrealistic viewpoint that develops from defects in knowledge or  evidence. But when a subject or situation is studied and understood, the  unknown becomes known and fear and doubt are overcome. Irrational  decisions are thereby avoided, or minimized, so that the problem at hand  is more likely to be successfully resolved. And so it is with the  irrational thinking and attitudes related to the handling of suspicious  claims and concerns about tort of bad faith.  What do fear and doubt have to do with the tort of bad faith? The fact  is that adjusters are faced almost daily with everything from an  insured\'s willful failure to cooperate to attempted bad faith setups,  intimidation, and threats of bad faith lawsuits. [See Borland v. Safeco  Ins. Co., 147 Ariz. 195, 709 P.2d 552 (Ct. App. 1985), for a detailed  discussion of how an insured and her attorney played games with claims  persons who the court described as "untrained or inexperienced, and  careless." 

The court was also critical of the activities of the attorney  who was intimately involved with the claim from day one. The claim  involved a burglary loss of jewelry and a concurrent policy with the  Home Insurance Company. The insured\'s reasons for having two homeowner\'s  policies were not addressed.  Enormous pressures come to bear on adjusters, which inevitably lead to a  conflict between their duty to provide service to insureds and their  equally important and compelling duty to keep them honest. Dishonest  insureds and unethical attorneys use extortive tactics, which are  designed to thwart an insurer\'s legitimate investigation and to coerce  insurers into paying questionable and meritless claims. Unfortunately,  these tactics are frequently successful, as many adjusters do not have  the specialized education, training or knowledge needed to respond  properly.   

Part of the problem is the unwillingness of some companies to educate,  train, and support experienced claims adjusters and SIU investigators to  be confident and confront the issues. Insurers must provide the moral  and financial support, including proper staffing and training, to  investigate, expose, and control fraudulent activity effectively. As a  consequence, some inexperienced, untrained and ineffective claims  adjusters are running scared and paying claims that should not be paid.  It is clear that the only way adjusters and insurers can minimize their  vulnerability to bad faith exposures, and at the same time control  fraud, is to become an expert in every facet of property claims  handling. Mere competence is insufficient.  Although contract law is replete with references to the good faith  duties of both parties, the rules generally have not been evenly and  fairly applied in the case of insurance contracts. More often than not  the burden of good faith and fair dealing has been one-sided, that is,  it has been placed almost exclusively on the shoulders of insurance  carriers. Little attention has been focused on the activities of the  insured, whether that activity has been a breach of conditions or other  conduct against public policy.  

\\xa9 2021 \\u2013 Barry Zalma