Looking a Little Closer at Bad Faith Insurance Claims in California

Oct.11.2023
Articles

Filing a claim with your insurance company should be simple, especially when your damages are clearly within your policy. However, too many insurers do everything possible to avoid paying valid claims.

At Starpoint Law, we have represented many clients due to bad faith insurance in California. You may be eligible for compensation if your insurer won’t honor your policy.

Overview of Bad Faith Insurance Claims

Bad faith insurance claims happen when an insurer acts unfairly or deceptively to avoid its obligations. The insurer might unreasonably deny, delay, or underpay a valid claim.

A bad faith claim in California can lead to significant financial losses and emotional distress. You can sue an insurance company and recover damages if it acts in bad faith.

Why Do Insurance Companies Act In Bad Faith?

Insurance companies are businesses, and businesses only succeed if they make money. For that reason, insurance companies often try to pay out as little as possible after receiving a claim. So most bad faith insurance claims are due to the insurer wanting to save money.

Money is not the only cause of bad faith. Insurance companies might also discriminate based on race, gender, religion, and other protected classes.

First-Party or Third-Party Bad Faith Claims

First-party insurance claims are between you and your insurance company. First-party bad faith claims are often for unfair or unreasonable dealings in handling a claim. This can include, but is not limited to:

Denying a valid claim without a reasonable basis,
Unreasonably delaying payment on a claim,
Undervaluing a claim,
Failing to investigate a claim properly,
Misrepresenting policy coverage, or
Coercing a policyholder into settling a claim for less than its fair value.

Third-party insurance claims typically happen when someone sues you for an accident. In these cases, your insurer will defend you in the claim and negotiate with the other side. However, a bad faith claim might arise when your insurance company fails to act in good faith during this process.
Some examples of third-party bad faith in California include:

Failing to defend a lawsuit against you,
Unreasonably refusing to settle a claim within policy limits,
Misrepresenting your liability to the third party, or
Colluding with you to defraud the third party.

Either way, you can sue your insurance company for acting in bad faith.

California Bad Faith Insurance Law

The California Insurance Code requires insurance companies to act fairly and honestly in all their dealings with policyholders, including handling claims. The law states that some acts that indicate unfair business practices include:

Unjustified denials,
Excessive delays,
Underpayment of claims,
Misrepresentation, and
Advising a claimant not to hire an attorney.

Insurers must also comply with the California Code of Regulations when reviewing a claim and considering settlement. Under this Code, insurance companies in California have:

15 days to respond to communications from a claimant,
15 days to acknowledge a claim and begin investigating it,
40 days to approve or deny a claim or send written notice requiring more time, and
30 days to make a full or partial payment on an undisputed claim after accepting it.

There are nuances to these laws and regulations, so not all insurance companies that fail to meet these requirements are acting in bad faith.

Why You Should Get Legal Representation

Having a skilled attorney’s guidance is invaluable when facing a bad faith insurance claim in California. Here’s a closer look at how an attorney can help your case.

Developing a Legal Strategy

Attorneys focusing on insurance disputes have a deep knowledge of California’s intricate laws and regulations. An experienced attorney will comprehensively evaluate your case and identify instances of bad faith. After this, they will determine the overall strength of your claim and the best ways to present your case.

Gathering and Reviewing Evidence

Your attorney will tell you what documents they need and how to get them. In some cases, they may be able to collect the documents themself. Your lawyer will then review all relevant documents to find evidence that supports a claim of bad faith insurance in California.

Negotiation and Litigation

Lawyers are skilled negotiators and should never hesitate to negotiate with insurance companies for you. Your attorney will explain how the evidence supports your claim that the insurer engaged in bad faith. They will work hard to secure a fair and favorable settlement, so you receive the compensation you deserve for your claim.

If the insurer won’t settle for a fair amount, your attorney will file a lawsuit and represent you in court. They will be ready to show a judge and jury how the insurer acted in bad faith and why you need compensation for your damages.

Speak with Starpoint Law About Your Bad Faith Claim

Our firm knows the ins and outs of bad faith insurance in California. Our attorneys have a unique insight into how insurance companies behave because we used to represent them. With our experience and attitude, we have helped many clients get high settlements from insurance companies.

Call Starpoint Law today to schedule a consultation.

Starpoint Injury Law Staff

Starpoint Law was founded on a number of core principles that allow us to help our clients and develop deep and meaningful relationships. If you have suffered injuries or facing an issue with your employer, reach out to our legal team and we can sit down for a free consultation and start the process immediately.