Californians expect that when they need them, their insurance companies will pull through and pay their claims or defend against a lawsuit. Unfortunately, sometimes insurance companies just do not follow through on the obligations at the critical time when people need them.
This can leave Californians in challenging positions.
Some insurance companies or individual claim adjusters use this vulnerability to insist on their own way, sometimes forcing a person to accept a significantly lower offer or settlement than they really should.
A bad faith claim can even the playing field
Like other states, California allows customers of insurance companies to sue them for bad faith if they delay, wrongly deny or underpay a claim. California has detailed rules setting out what constitutes bad faith on the part of an insurance company. On the most basic level, these rules require companies to promptly and accurately communicate with their customers, especially when denying a claim.
The rules also require companies to conduct an objective and thorough investigation into a claim. Companies cannot have a policy of denying claims or only conduct just enough of an investigation to issue a denial.
These rules help even the playing field against an unscrupulous insurance company in a couple of important respects.
First, a policy’s limits do not apply to bad faith claims. For example, an insurance company which acts properly will only pay up to $100,000 in compensation assuming that is what the policy says, even if the insurance company’s client lost a lot more. In a bad faith claim, the consumer has a better chance of a full recovery.
Furthermore, bad faith claims allow victims to claim additional non-economic damages, including damages for emotional distress. Punitive damages are also possible in some circumstances.
Bad faith insurance claims can be challenging to navigate alone. An experienced attorney can provide dedicated assistance.