5.1.6 Standards

JurisdictionArizona

The scope of the insurance company's duty of good faith "cannot be delineated by the customs of the insurance industry."[100] Moreover, compliance with industry custom is not an absolute defense to a bad faith claim, although failure to comply may be relevant to the question of an insurer's alleged bad faith.[101]

There are three statutes regarding bad faith: (1) A.R.S. Sec. 20-675 conveys immunity for Arizona's property and casualty insurance guaranty fund unless bad faith is committed (which will not be discussed herein); (2) A.R.S. Sec. 20-461 embodies Arizona's Unfair Claims Settlement Practices Act and must be read in conjunction with the Department of Insurance Rule R20-6-801; and (3) A.R.S. Sec. 23-930 involves bad faith claims under Arizona's Workers' Compensation Act.

In Melancon v. USAA Casualty Insurance Co.,[102] the trial court instructed the jury with language taken verbatim from Rule R20-6-801 (formerly R4-14-801). This rule was promulgated to flesh out A.R.S. Sec. 20-461, but Sec. 20-461 specifically...

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