Insurance bad faith in California can be complex, confusing, and challenging to wade through on your own. Bad faith in insurance can occur with any insurance policy, and familiarizing yourself with what constitutes bad faith and what to do if you believe your insurance company is conducting itself in such a way is essential.
Allow this article to be a quick reference guide when facing roadblocks with your insurance company. Our insurance bad faith California attorneys are also available to answer your questions and provide further advice and guidance.
What Is Insurance Bad Faith?
Bad faith exists in almost every area of the law in some capacity. Insurance bad faith refers to an insurance company’s conduct related to policy claims. As a policyholder, you enter into a contract with your insurance company when you purchase coverage.
Under that policy, the carrier is required to oblige by their legal obligations. If they fail to uphold their duties and responsibilities, they may be held liable for bad faith.
Types of Bad Faith Insurance Claims in California
There are generally two types of bad-faith insurance claims. You may be able to bring one or both, depending on the circumstances of your case.
A first-party bad faith insurance claim is one that you will file with your own insurance company if they fail to pay or unreasonably delay your claim. For example, if a fire damages your house, you will file a claim with your homeowner’s insurance for reimbursement to repair or rebuild your home.
If your insurer unreasonably denies, delays, or underpays your claim, you may have a bad faith cause of action against them.
On the other hand, a third-party claim usually arises when your insurance is obligated to defend on your behalf. It typically occurs when another person files a claim against you for personal injuries or damages due to an accident you allegedly caused.
You may have a bad faith cause of action against your insurer if they refuse to provide you a defense.
Under California law, the following are examples of bad faith insurance claims:
- Refusing to pay a valid insurance claim,
- Unreasonable delay of payment,
- Failing to explain a denied claim,
- Failing to defend against a claim adequately,
- Untimely or inadequate investigation,
- Negligent handling of the claim, and
- Failing to comply with the law.
Remember, these are only a handful of bad faith examples. It is possible for many other scenarios to give rise to a valid claim.
Steps to Take
Pursuing a bad faith claim can be complex and often takes time and preparation. If you believe you are dealing with the inappropriate or mishandling of an insurance claim, you should take the following steps:
- Collect all relevant documentation and information,
- Review your insurance policy and benefits closely,
- Obtain a copy of the denial letter,
- Submit an appeal or request to re-review your claim (i.e., for mistakes or errors),
- Submit a demand letter to the insurance company,
- Turn to the California Department of Insurance for guidance, and
- File a lawsuit against the insurance company if necessary.
While these steps may sound straightforward, you can expect to meet roadblocks along the way. Insurance companies typically heavily defend against these allegations. It is also imperative that your paperwork is accurate and free of errors.
If you are considering pursuing a bad faith claim against your insurance company, we recommend meeting with an experienced attorney first. Having a skilled lawyer assist you can mean the difference between a successful claim.
California Bad Faith Insurance Claims Law Firm
At Peerali Law, we have extensive experience dealing with insurance companies and can guide you through every step of your bad faith insurance claim.
We specialize in crafting innovative and creative legal solutions and are committed to bringing our clients persistence and passion in our work. Get in touch and see how our team can help you.