5.1.3 Timing; Statute of Limitations

• Jurisdiction: Arizona

An insured does not have to wait for the insurance company to breach its contract before filing a lawsuit alleging a bad faith claim.^[64] Indeed, the applicable statute of limitations is not triggered by a breach of an express policy provision. In Ness v. Western Security Life Insurance Co.,^[65] the court found that the 2-year statute of limitations period fixed by A.R.S. Sec. 12-542 was applicable to the tort of bad faith. The court in Ness observed that, under Arizona law, "an insurance company commits bad faith when it (1) intentionally (2) denies, fails to process, or fails to pay a claim (3) without a reasonable basis for such action."^[66] The cause of action for bad faith arises only when all three elements are present. When all three...