What Is Insurance Bad Faith? Los Angeles Insurance Lawyers

What is meant by the term “bad faith insurance”?

In California, insurance companies breach the implied covenant of good faith and fair dealing, commonly referred to as acting in “bad faith,” when they unreasonably or willfully deny benefits under an existing and enforceable California insurance policy on a valid claim.

In other words, it is enough to show bad faith if an insurance company simply handles your claim in an unreasonable fashion. When an insurance company acts in bad faith, you have a right to seek legal representation by an experienced bad faith insurance attorney.

Under California law the following are examples of unreasonable (“bad faith”) handling of a claim:

1. Refusing to pay a valid insurance claim.
Sometimes insurance companies refuse to pay a valid claim without any reasonable or valid justification. Such conduct is quintessential bad faith.

2. Refusing to pay the full value of your claim under the insurance policy.
An insurance company must pay all that it owes you.  Anything less is unreasonable and in bad faith.

3. Taking too long to pay or deny an insurance claim.
Most of us who buy insurance expect our valid claims to be paid right away.  Generally insurance companies are required to accept or deny your insurance claim within forty days.  Unreasonable and unjustified delay is bad faith.

4. Refusing to provide an insurance attorney to defend you or your business if you are sued.
Most auto, homeowners and business insurance policies have liability provisions. This means that if you are sued, and you are covered under the policy, the insurance company has to pay for your insurance attorneys plus other expenses necessary to defend you. Unreasonably refusing to provide such a defense is bad faith.

5. Failing to timely, thoroughly, objectively, and fairly investigate your insurance claim.
Insurance companies are supposed to be on your side when you file a valid claim.  Generally, the insurance company is supposed to look for insurance coverage – not ways to deny your claim.  The claim process is not supposed to be adversarial.  The insurance company cannot put its interests above yours.  Failing to investigate your insurance claim fairly and objectively is unreasonable and in bad faith.

6. Failing to comply with California’s “Fair Claims Settlement Practices Regulations.”
We all need insurance. In some circumstances it is required by California law, such as automobile liability coverage. Insurance has become a vital part of our society. Because it is so important and subject to abuse by insurance carriers, the California Legislature passed enabling legislation to form the California Department of Insurance. It also gave the Department of Insurance the authority to promulgate (make) mandatory regulations that insurance companies must follow. Some of these regulations are known as the California Fair Claims Settlement Practices Regulations. These regulations tell insurance companies certain things that they must do when adjusting your insurance claim. An insurance company’s failure to follow these Regulations is unreasonable and evidence of bad faith.

7 Refusing to pay your insurance claim after the California Department of Insurance determines that you have a valid claim.
The California Department of Insurance is California’s consumer protection agency whose primary charter is to protect all of us from unfair conduct from insurance companies.  Believe it or not, some insurance companies refuse to pay valid claims even after they are told to do so by the California Department of Insurance. These extreme cases often require the expertise of professional bad faith insurance attorneys.

8. Failing to authorize necessary medical treatment that you are entitled to under a health insurance policy.
Sometimes insurance companies refuse to pay for treatment that you are entitled to, claiming that the treatment is not medically necessary when your own treating doctors say it is.  Such refusal often cannot be justified and is bad faith.

If your California insurance company handles your insurance claim in bad faith, you are entitled to all damages caused by this bad faith conduct, including emotional distress, lost income, lost opportunity, insurance attorney fees, interest, and other types of damages.

If you have made an insurance claim in California and you have questions about the process, or if you believe your insurance company is handling your case unfairly, you should seek help from professional California insurance bad faith attorneys.

Gary K Kwasniewski is an “AV Rated” insurance bad faith attorney and principal lawyer with the Los Angeles, California based law firm, Viau & Kwasniewski.