When Insurers Act Unfairly

Dealing with an insurance company can be stressful, especially when you believe your claim has been unfairly denied, delayed, or underpaid. In California, insurance companies are required to act in good faith toward policyholders. When they don't, it may be considered "bad faith." If you suspect your insurer isn't holding up their end of the bargain, you're not alone. Many Californians face this challenge, whether the issue is related to homeowners’ claims, auto accidents, or even wildfire property losses. If your claim involves property damage from a wildfire or underpayment of claims, understanding your rights is the first step toward resolution.

Defining Bad Faith

"Bad faith" happens when an insurance company fails to treat its customers honestly and fairly. This can include:

• Unjustified denial of a valid claim
• Delaying payment without good reason
• Failing to investigate a claim properly
• Offering far less than the claim is worth

In California, both personal injury and insurance laws protect consumers from these unfair practices. Bad faith isn't limited to one type of policy; it applies to health, auto, homeowners, and business insurance.

Key California Laws

California has some of the strongest consumer protections for insurance policyholders. The main laws include:

• California Insurance Code §790.03(h): Lists unfair claims practices, such as misrepresenting facts or policy provisions, failing to acknowledge communications, and refusing to pay claims without reasonable investigation.
• Implied Covenant of Good Faith and Fair Dealing: Every insurance contract in California includes this, requiring insurers to treat policyholders fairly.
• Fair Claims Settlement Practices Regulations (CCR Title 10, §2695.1 et seq.): Outlines how insurers must handle claims, with timelines for responses and requirements for thorough investigations.

If your insurer has denied or delayed your claim, coverage denials may also apply to your situation.

What Insurers Must Do

California law requires insurance companies to:

• Communicate promptly and clearly
• Investigate claims thoroughly
• Explain claim denials in writing
• Pay valid claims quickly and fairly

If you're facing unfair insurance tactics, it's important to know that these obligations are enforceable. Insurers who fail to meet them may be held liable for bad faith.

Your Action Plan

If you think your insurer acted in bad faith, take these steps:

• Document Everything: Keep all written correspondence, notes from phone calls, and copies of your claim paperwork.
• Request Written Explanations: If your claim is denied or delayed, ask for reasons in writing.
• Know Your Policy: Review your insurance contract so you understand your coverage.
• File a Complaint: Report unfair practices to the California Department of Insurance.
• Get Legal Guidance: A lawyer can help you determine if you have a viable bad faith claim and guide you through the legal process.

For more on specific steps, see How to Prove Bad Faith in Claims.

Damages You Can Seek

If an insurer is found to have acted in bad faith, you may be entitled to more than the original value of your claim. California law allows for:

• The full amount of your covered losses
• Interest on delayed payments
• Emotional distress damages in some cases
• Attorneys’ fees in certain situations
• Possible punitive damages if the conduct was especially egregious

For a deeper look at potential recovery, read California Bad Faith Lawsuits Against Insurers.

Frequently Asked Questions About Bad Faith Claims

What is insurance bad faith in California? Insurance bad faith in California occurs when an insurer unreasonably denies, delays, or underpays a valid claim, or otherwise fails to treat the policyholder fairly as required by law.

What laws protect policyholders against bad faith? Key protections include the California Insurance Code §790.03(h), which lists unfair claims practices, and the implied covenant of good faith and fair dealing in all insurance contracts.

What should I do if I suspect bad faith by my insurer? Document all communications, review your policy, request written explanations for any denials, and consider filing a complaint with the California Department of Insurance. Consulting a lawyer can also help.

What damages can I recover in a bad faith claim? You may be eligible to recover the full value of your claim, interest, emotional distress damages, attorneys’ fees, and possibly punitive damages if the insurer’s conduct was especially wrongful.

Can bad faith claims apply to all types of insurance? Yes. Bad faith laws in California apply to many types of insurance policies, including auto, homeowners, health, and business insurance.

We’re Here to Support You

You don’t have to face unfair insurance practices alone. Attain Law is here to help Californians navigate insurance, bad faith claims, and related disputes. If you have concerns about your claim, contact us today for a free consultation or call (888) 970-8627. We’re committed to helping you find answers and move forward.

Disclaimer: This is an advertisement. The information provided is for general purposes only and is not legal advice. Consult a qualified attorney for your specific case. Attain Law cannot guarantee outcomes, as results vary by situation.

Browse Articles for "Bad Faith Claims" in California: