Fighting Bad Faith Insurance Companies In California

Not every insurance company mistreats their insureds when a claim is made.  Many, however, do.

This improper treatment of insureds typically is born out of the insurance carriers’ desire to improve their own bottom line – to make a profit off of their insureds, and to turn the insurance claims department into a profit center.

Proper Conduct of Insurance Companies

Why is it improper for insurance companies to consciously seek to make a profit off of their insurance claims handling centers?  Because by law, an insured’s claim should be handled;

  • Properly
  • Promptly
  • Objectively
  • And without bias

If there is insurance coverage, the claim should be paid based upon what that claim is worth – period.

Improper Insurance Company Conduct

An insurance company should not:

  • Engage in purposeful undervaluation of a claim to improve its own bottom line
  • Purposely delay payment of benefits due simply to wear down its insured
  • Forestall having to pay the claim in order to gain interest off of monies due
  • Consciously avoid coverage, and deny a claim it knows is valid, solely to reap a profit at the expense of its insured.

This is improper and unreasonable insurance company conduct.

You Should Not Have to Fight Insurance Companies

Insurance companies can be quite large and powerful. Insureds should not be put in the position of having to “fight” their insurance companies.  This happens, however, when the insurance carrier makes the claims handling process adversarial.  In California, an insurance company is obligated to assist an insured when an insurance claim is made (Regulations, section 2695.5), not make the insured’s life miserable.  In California, an insurance company may not discriminate in its claims handling practices, and must accept or deny the claim – usually immediately, and in no event (subject to certain exceptions) within 40 days.  (Regulations, section 2695.7.)

Seeking Legal Council

Most insureds/potential clients contact a bad faith insurance lawyer after they have already been put in the position of having to “fight” because of the insurance company’s “bad faith” misconduct.  By the time most insureds/potential clients are forced to seek legal help, they already instinctually believe that the insurance carrier has not dealt with them fairly, properly, or in “good faith.”  Once the claims handling process has degraded to the point that the insured feels he or she needs legal help, typically, the parties are at a “stand off.”  It is at this point that bad faith litigation ordinarily ensues.

Fighting an insurance company in California is not easy; but, an insured should:

  • Not be placed in this position in the first instance (however, once in this position, the insured…)
  • Needs bad faith insurance lawyers who understand California insurance law and how insurance companies work, and know how to “fight” bad faith insurance companies

Acts of Bad Faith by Insurance Companies

When fighting bad faith insurance companies in California, individual or business policyholders may sue for breach of contract and for breach of the implied covenant of good faith and fair dealing. Policyholders may recover their out of pocket costs and attorney fees and may also be compensated for the emotional distress suffered as a result of the bad faith conduct of the insurance company.

In California, the law states that acts of bad faith by insurance companies (or HMOs) may include…

  • Failing to adequately or promptly investigate an insurance claim
  • Attempting to avoid, reduce or withhold payment of insurance claim benefits
  • Refusing to defend or settle a case brought against a policyholder
  • Unreasonably delaying payment on an insurance claim
  • Interpreting insurance policy language unreasonably against the insured
  • Refusing to reimburse a policyholder for a covered loss
  • Misrepresenting facts or insurance policy provisions
  • Failing to acknowledge and act reasonably and promptly on communications from the policyholder
  • Failing to affirm or deny insurance coverage within a reasonable time
  • Failing to attempt in good faith to effectuate prompt, fair and equitable settlement of claims, where liability is reasonably clear
  • Compelling a policyholder to file bad faith litigation to recover policy benefits
  • Failing to promptly provide a reasonable explanation of the basis for denial of an insurance claim
  • Advising a claimant or policyholder not to obtain the services of an insurance attorney

If you feel you’ve been victimized by acts of bad faith by your California insurance company, you do have a right to fight back and seek the help of legal counsel from experienced bad faith insurance litigation 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.