The Arizona Court of Appeals in a recent opinion said, Yes to both. In Farmers Insurance Exchange v. Udall,1 four homeowners insured by Farmers Insurance Exchange (“Farmers”) sustained separate losses, which required water damage mitigation and restoration services. The homeowners hired a vendor to perform the mitigation and restoration services. In each case, the insureds assigned to the vendor their “rights, benefits, proceeds and causes of action” under their respective insurance policies.
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In 2017, the Arizona Supreme Court changed the scope and limits of discovery to “any non-privileged matter that is relevant to any party’ claim or defense and proportional to the needs of the case.”1 Starting in July 2018, Arizona Rule of Civil Procedure 26.2, will take effect. Rule 26.2 has been significantly changed, adopting a “Three-Tiered” system of civil case management to make discovery occur in a manner consistent with Rule 26.1(b)(1)—proportional discovery.
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In Arizona, the statute of limitations for a cause of action for insurance benefits will begin to run from the date the insurer committed a breach, unless the policy states otherwise (i.e., from the “inception of” or “date of” loss). Typically, this means from the date the insurer denies claim benefits to its insured.1
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In prior blog posts on assignment of contingent benefits, I discussed the distinction between assignments of contingent benefits and assignments of noncontingent benefits under a property insurance policy. For the purpose of this post, a contingent benefit is a benefit or payment that is either not yet fixed in amount or regarding which the carrier is not yet obligated to provide because additional, specific conditions of the policy have not yet been fulfilled or excused. Noncontingent benefits are those for which all conditions have been fulfilled or excused and the carrier’s obligation to provide the benefits (such as a payment) has accrued.
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It is well established in Arizona that an insurance “carrier has an obligation to immediately conduct an adequate investigation, act reasonably in evaluating the claim, and act promptly in paying a legitimate claim.”1 The Arizona Unfair Claims Settlement Practices Act likewise provides that a carrier shall not “[r]efuse to pay claims without conducting a reasonable investigation based upon all available information.2 In all aspects of investigating or evaluating a claim, an insurance carrier is required to give as much consideration to the policyholder’s interests as it does to its own interests.3 So much so, that “Indifference to facts or failure to investigate [by a carrier is] sufficient to establish the tort of bad faith” against the carrier.4
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Papago State Park

A few weeks ago I traveled to Scottsdale, Arizona for a deposition. After the deposition concluded, I had a little bit of time before my flight home, so I stopped by Papago State Park in Phoenix to take in some of Arizona’s beauty and to take a few photographs (including the one above). This week in my series on insurable interests, we travel to the Copper State (aka the Grand Canyon State) to take a look at how insurable interests are defined.


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In Arizona, there is a six year statute of limitations for a breach of contract claim. However, Arizona law permits an insurance company to contractually shorten the statute of limitations period by which the policyholder must file suit, so it is likely that the limitations period could be as short as one or two years from the date of loss. My colleague Kenneth Kan previously discussed this in Arizona: How Long Does a Policyholder Have to File Suit Under an Insurance Policy?


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