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

Read the full article at https://www.linkedin.com/pulse/tort-bad-faith-investigation-insurance-fraud-barry-zalma-esq-cfe and see the full video at https://rumble.com/c/c-262921 and at https://youtu.be/7pC0y9ZnkCQ and at https://zalma.com/blog plus more than 3850 posts.

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.

ZALMA OPINION

Insurance fraud is a hindrance to the ability to price insurance reasonably and to the effective operation of the insurance industry. The bad faith tort, created for the good reason that some insurers took unreasonable and wrongful advantage of those they insured. Insurance fraud perpetrators have taken advantage of the attempt to make insurers act fairly and have made the insurer a victim unable or unwilling to fight insurance fraud for fear of tort damages. This video goes far to explain what is really happening to insurers faced with fraud.