Although not every claim denial is bad faith, an insurance company can be accused of this if its decision is unreasonable or without proper cause. Understanding what bad faith is in California can help you make a legal claim for benefits, damages, and more. When an insurer does not act in good faith toward its policyholder, I take that up with the company directly and, where it is warranted, in court.
By law, insurance companies must avoid unfair and unreasonable conduct in the way they handle claims. The failure to do so may constitute bad faith, which can cost a policyholder substantially. The good news, however, is that the insured may have the ability to seek legal remedies.
Did your insurance company act in bad faith, or are you simply not sure whether you were treated fairly in the claims process? Get in touch with Abramyan Law, P.C. I can review how the insurer acted in your case and, if there is evidence of bad faith, take steps to remedy the problem.
What to Know About Insurance Bad Faith in California
Bad faith isn’t simply denying a claim. Insurance companies can have valid reasons to deny a claim or can make an honest mistake in doing so. In California, an insurer acts in bad faith when it withholds policy benefits unreasonably and without proper cause, or otherwise fails to deal fairly with its policyholder. Both halves matter: an insurer with a genuine, reasonable basis for its position has not acted in bad faith merely because it turns out to be wrong.
Policyholders expect and deserve fair treatment from the insurance companies to which they faithfully pay their premiums. If the insurer either rejects or underpays a claim, it could be an act of bad faith if it is accompanied by such conduct as:
- Unreasonably denying a valid claim: The insurance company may flat-out reject a claim, without cause, and hope the insured gets frustrated and gives up.
- Unreasonably delaying payment: On the other hand, the insurer may approve the claim but drag its feet, without a good reason, in paying it.
- Failing to properly investigate a claim: The insurer cannot simply take a cursory look at the facts of the claim and make a hasty decision; it should conduct a genuine investigation.
- Undervaluing a claim: Even if the insurer agrees to pay you, and does so in a timely manner, what you receive may be less than the true value of your loss.
- Failing to appropriately communicate with the insured: A common bad faith tactic is to unreasonably delay communications in hopes of frustrating the policyholder.
- Unreasonable rejection of a settlement offer in a liability case: If the insurance company is handling a liability claim on behalf of the insured, it should consider reasonable settlement offers and not reject them unreasonably.
Pursuing a Bad Faith Insurance Claim
If your insurer withheld benefits without a reasonable basis, you may be able to take legal action to hold the company accountable. This could include recovering not only unreasonably withheld benefits but also seeking monetary damages for losses that are caused by the insurance company’s actions.
The exact recovery available will depend on the specific facts of each case. But it could include:
- Unpaid benefits that the insurance company should have paid pursuant to the policy
- Consequential damages stemming from the insurer’s conduct, as long as they are recoverable and connected to the bad faith actions
- Attorney’s fees incurred to recover policy benefits wrongfully withheld due to bad faith
- Punitive damages in limited cases involving oppression, fraud, or malice
A Note on Timing
Bad faith claims do not stay available indefinitely. The claim for the withheld benefits runs against the policy’s own suit provision, which in first-party property policies is often shorter than the statutory period, and the bad faith claim itself carries its own limitations period. An appeal to the insurer, a reinspection, or a long negotiation can quietly consume that time without either side calling it a dispute. If you are already some way into one, it is worth checking where you stand before continuing down that road.
Relentless but Patient. Reach Out Today!
As an attorney representing policyholders who have been subjected to bad faith, my aim is to have the claim measured against the terms of the policy and the facts of the loss. Reach out to my firm, Abramyan Law, to learn more. I meet with clients in English, Armenian, and Russian.