Policyholders may be entitled to recover money and other forms of compensation from their insurance company or another responsible party. This may not happen if the insurer wrongfully denies or underpays the claim, or engages in bad faith. If you file a claim, you should understand what bad faith looks like and how it can affect settlements and judgments. I represent policyholders whose insurance companies don’t treat them fairly, and I explore all available legal options for a positive resolution.
Insurance claims do not always proceed the way policyholders expect. The insurer may deny the claim, offer less than the claim is worth, or fail to protect the policyholder from financial consequences related to the claim or a lawsuit. Sometimes these decisions are made in bad faith or in violation of the policy.
I represent policyholders in those disputes, whether the claim involves fire or wildfire damage, other property loss, or an insurer’s refusal to settle a liability claim within policy limits. Having spent years evaluating these claims from the carrier side, I know how insurers assess them and where their positions tend to give way.
Insurance Bad Faith
California law requires insurance companies to handle claims fairly and reasonably. Although not every denied claim is proof of bad faith, there are signs that policyholders should watch out for. An insurance company can face a bad-faith claim if it acts or fails to act in certain ways.
Insurance bad faith refers to the unreasonable withholding of insurance benefits or otherwise failing to deal fairly with the insured or handle the insured’s claim. Not every claim denial is necessarily an act of bad faith, but it could be evidenced by:
- Unreasonably denying a valid claim
- Undervaluing a valid claim
- Unreasonable delays in communications and claims processing
- Failing to investigate a claim adequately
- Unreasonably delaying payment
Excess Judgments and Failure to Settle
If an insured faces a liability claim, the insurer may have a duty to consider reasonable settlement options. Refusing to settle could expose the policyholder to an excess judgment. Similar to bad faith, not every excess judgment necessarily indicates insurance wrongdoing. Refusing to settle can expose the policyholder to a judgment exceeding those limits. Not every excess judgment reflects insurer wrongdoing, but where the carrier had a reasonable opportunity to resolve the case within limits and did not take it, the insured may have a claim for the entire judgment, not just the policy amount.
When I handle these issues for clients, I examine various facets of the claim to determine if the insurance company acted unreasonably in failing to settle. These include:
- The settlement demand and conditions made to the insured
- The limits of the insurance policy
- Whether the insurance company had a reasonable opportunity to settle
- The likelihood and possible amount of an adverse judgment
- How the insurer investigated and handled the claim
- Communications between the insurer and the policyholder
There are various options for dealing with an insurance company’s failure to settle, which I can go over with you. Possible examples include seeking to hold the insurer liable for the entire judgment, seeking monetary damages through a bad-faith lawsuit, and requesting reimbursement.
Fire, Wildfire, and Property Claims
Property owners can face several claims, the outcomes of which could have substantial effects on their financial interests. These may involve fire and wildfire damage, two problems that are especially pronounced in California. As the insured, you could face disputes with your insurer involving whether the loss is covered, the nature of the damage, and the amount that the insurer should pay.
Some specific issues that could arise with your claim are:
- Whether your policy covers the fire, wildfire, or property damage
- Assessment and valuation of the damage
- Structural damage and rebuilding costs
- Whether the owner mitigated losses
- Smoke and ash damage, and debris removal
- Disagreements over policy limits and exclusions
If you have encountered any of these problems with your insurer, let me review your claim. I can examine the policy, assess whether the insurer’s handling of the claim was reasonable, and discuss the remedies available. Those go beyond the benefit the policy owed. In a first-party bad faith case California allows recovery of the damages the insurer’s conduct caused, and under what lawyers call Brandt fees, the attorney’s fees you incur to recover benefits that were wrongfully withheld. In limited cases involving oppression, fraud, or malice, punitive damages may also be available. The practical effect is that pursuing a wrongfully denied claim can make economic sense even where the underlying benefit is modest.
The complaint tells you what happened. The policy tells you what it’s worth.
I’m ready to help, so get in touch with me to get started. I meet with clients in English, Armenian, and Russian.