Insurance Law & Bad Faith

Insurance Bad Faith in California

When you need your insurance, it is the legal obligation of the insurer to see that your claim gets paid if it meets the contract of insurance they sold you, regardless of whether it means they may lose money. When an insurance company refuses to pay a legitimate claim, it is called "bad faith." California law provides stiff penalties for bad faith.

Under the law, insurance companies cannot process a claim based on some internal policy of just denying everything that comes in. While many insurance companies adhere to the law, others do not. Their philosophy is, "deny everything first and see if the claimant squawks." They may know that you have a valid claim, but if you don't follow-up, they've just increased their bottom line at your expense.

Further evidence of bad faith and mistreatment of policyholders is how policies are drafted. Insurance policies are intentionally confusing and ambiguous, giving the insurance companies the edge over consumers. They know that if you don't understand how to interpret the policy's terms, how can you challenge your denial? This practice can occur whether you are submitting a claim under your automobile coverage, your health insurance, disability-even life insurance. Regardless, under the covenant of good faith in fair dealing (which covers all insurance contracts), fraudulently denying or willfully refusing to pay a legitimate claim is illegal.

Some examples Insurance Bad Faith include:

• Denying insurance benefits due under a policy;
• Failing to investigate or failure to properly investigate a claim;
• An unreasonable delay in payment of benefits due;
• Unreasonably low offers to compensate justified damages;
• Refusal to disclose policy benefits to the insured.

At Hiepler & Hiepler, our attorneys are dedicated to holding insurance companies to their coverage obligations. If an insurance company has refused payment, or delayed benefits on a legitimate claim, contact us. We can help.