First-Party vs. Third-Party Bad Faith in Arizona
Arizona draws the same basic line California does: your own insurer owes you a duty you can enforce, while the other side's insurer owes its duty to its own insured.
First-party claims
Against your own carrier — property, uninsured and underinsured motorist, health, disability, life. The Zilisch standard and the equal-consideration requirement apply directly, and this is the setting where most Arizona bad-faith cases arise.
Third-party claims and the duty to settle
When an insurer defends its insured against a claim, it must give the insured's interests equal consideration to its own in deciding whether to settle within limits. Arizona has gone further than some states, recognizing that an insurer may be liable for failing to solicit a within-limits offer where the circumstances warrant it.
What happens when the judgment exceeds the limits
The insured is exposed for the excess, and that exposure is the basis of the insured's own bad-faith claim against the carrier — which may be assigned as part of resolving the underlying case.
The insurer may try to move first
Arizona insurers can file a declaratory-judgment action to test coverage before or after the underlying trial. That is a procedural reality worth understanding early, because it changes where and when the coverage fight happens.
Common questions
Can I sue the at-fault driver’s insurer in Arizona?
Not directly for bad faith. The duty runs to their insured; your route is through excess-judgment exposure and assignment.
Does the insurer have to try to settle?
It must give its insured’s interests equal consideration, and Arizona has recognized liability for failing to pursue a within-limits resolution where warranted.
Is your insurer treating you unfairly?
A free, confidential review can tell you whether what happened crosses the line — no cost, no obligation.
Related Arizona law
Official sources
General information about Arizona law, not legal advice. Every policy and every claim is different.