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How California Bad Faith Insurance Law Protects Policyholders

When you purchase insurance, you do so with the understanding that your insurance company will provide coverage when you need it. The insurance company has a legal duty to uphold the terms of the policy and pay valid claims. Essentially, an insurance policy is a contract between you and the insurance company.

While insurance companies are legally required to act in good faith, they sometimes do not. Fortunately, California's bad faith insurance law protects policyholders. When an insurance company fails to pay your valid claim for medical insurance, ERISA, disability, or homeowners' insurance, you can file a bad faith lawsuit to get the benefits you need.

What Is Bad Faith Insurance in California?

States have insurance laws that determine what may constitute bad faith tactics from an insurance company. Insurance bad faith cases involve insurance companies who engage in unfair or unreasonable business practices. If at any point your insurance provider breaches its duty of good faith during the claims process, then you should contact an insurance bad faith attorney. You and your attorney can work together to demonstrate that you had a valid claim and that your insurance company did not have sufficient reason for denying your benefits.

On this page, we included some examples of what might constitute insurance bad faith in California. Please reach out to our San Francisco insurance bad faith attorneys if you have more specific questions about California insurance laws or about suing an insurance company for a denial or delay of your medical insurance, ERISA, disability, or homeowner insurance claims. 

California Bad Faith Insurance Law Protects Policyholders

Bad faith occurs whenever an insurance company fails to uphold their end of the policy. California bad faith insurance statutes outline specific acts that can constitute bad faith.

Some of these acts include, but are not limited to:

  • Denial of policy benefits
  • Misrepresentation of facts or policy
  • Failure to respond to a claim
  • Not promptly investigating or processing claims
  • Refusing to fairly settle claims
  • Attempting to low-ball a client with an unreasonable settlement
  • Threatening to appeal an arbitration award
  • Failing to provide justification for a claim denial
  • Misleading a policyholder
  • Requiring a policyholder to undergo unnecessary medical testing

These are just some of the ways an insurance company might act in bad faith. If you believe your insurance company has acted in bad faith against you, contact a San Francisco insurance bad faith lawyer from our firm. We can help you determine whether the insurance company acted in bad faith.

Filing a Bad Faith Insurance Lawsuit

Filing a bad faith insurance lawsuit is not easy without the help of an experienced attorney. How you file depends on your situation. How long it takes also depends on your situation.

First-Party Bad Faith

If your insurance company committed bad faith, you would need to file a first-party insurance bad faith claim. These claims are like breach of contract claims. The language in your policy may dictate how to proceed through the legal process. If you believe your insurance company has committed bad faith, follow these steps.

Third-Party Bad Faith

If you have filed a claim with someone else’s insurance company, you would need to file a third-party claim. In these claims, you are not fighting with your own insurance company. Instead, the issues arise with the other person’s or entity’s insurance company. For example, most car accident claims are third-party claims.

Fortunately, the insurance company is bound by law to consider the policyholder’s interests as much as its own interests. This means they have a duty to defend and indemnify their policyholders. When a third-party makes a claim, the insurance company must promptly and fairly investigate that claim. They must also honor the policy and provide the policyholder with a legal defense.

If an insurance company acted in bad faith, the courts may award damages to you. Those damages could include:

  • Total amount of the loss
  • Emotional distress
  • Attorney fees
  • Punitive damages

In some cases, the courts may award punitive damages to punish the insurance company for acting in bad faith. A San Francisco bad faith insurance lawyer from our firm can help you determine the best course of legal action for you during this time.

Contact Our San Francisco Bad Faith Lawyers

If you believe your insurance company has acted in bad faith, it is important to speak to a lawyer immediately. Insurance companies have large legal teams on their side fighting for their rights. You need someone on your side fighting for you.

At DL Law Group, our San Francisco bad faith lawyers are here for you. We know the tactics insurance companies use to reduce their liability and we fight against them. Do not attempt to sue the insurance company alone.

Call us at F:P:Sub:Phone} or fill out our confidential contact form for more information. We are happy to speak with you about your insurance problem during a free consultation.