3 Examples of Insurance Bad Faith in California

If you or a loved one have insurance from a company that treats you unfairly, you may have a case against the insurance company for acting in bad faith.

What is Bad Faith?

Insurance companies are legally required to honor the terms and conditions in the insurance policies they underwrite. Operating in bad faith is not honoring the terms and conditions of their issued policies.

Insurance companies operating in California must follow the laws prohibiting unfair and deceptive acts or practices, as defined under the California Code, Insurance Code (INS § 790.03).

Here are just a few of the many acts defined as insurance bad faith under California law:

  • Telling a person with a claim not to hire an attorney
  • Unfair denial of policy benefits
  • Failing to provide adequate and prompt justification for the denial of a claim
  • Misrepresenting facts or policy exclusions
  • Failing to either approve or deny a claim within a reasonable time after the insured person submits proof of loss
  • Forcing the insured to file a lawsuit for a claim by refusing to offer an adequate settlement
  • Misleading an insured person about the legal deadline for filing a claim or filing a lawsuit

Examples of Bad Faith

Here are three case categories that illustrate examples of where an insurance company acts in bad faith.

Bad Faith Denials – Denying a Claim Without a Reason

When an insurance company declines your car accident claim, they are required by law to provide you with a reason. If they don’t, they are acting in bad faith. Furthermore, refusing to pay or settle a valid claim can also be considered bad faith.

Bad Faith Failure to Settle – Insurance Company Fails to Accept a Reasonable Settlement Demand

A legal action for a bad faith failure to settle may be brought against an insurance company if it acts unreasonably when it fails to accept a reasonable settlement demand. Suppose a settlement demand is offered for a claim and the amount demanded is within the policy’s limits. In that case, an insurance company cannot unreasonably refuse to accept the settlement offer and must pay the claim.

Bad Faith Investigation – Insurance Company Fails to Investigate a Claim

It might be appropriate to bring a bad-faith lawsuit if an insurance company fails to investigate a claim promptly or does not use reasonable procedures when investigating a claim. An insured person has the right to have their claim processed reasonably and swiftly. Insurance companies cannot simply ignore claims or fail to respond within a reasonable time after an insured person submits adequate proof of loss.

Get the Help You Need

You are right if you think bringing a bad faith lawsuit against an insurance company is complex and challenging. Nevertheless, if your claim is unfairly denied or the insurance company acts in bad faith, you need the help of an attorney to protect your rights. Call (281) 475-4535 to set up an appointment for a free consultation.