CALIFORNIA INSURANCE BAD FAITH I PERSONAL INJURY I CIVIL LITIGATION – What is a Bad Faith Insurance Claim?

CALIFORNIA INSURANCE BAD FAITH I PERSONAL INJURY I CIVIL LITIGATION – What is a Bad Faith Insurance Claim?

November 27, 2019

What is a Bad Faith Insurance Claim?

When an individual purchases insurance from a carrier and is contractual insured, obligations are created.  These obligations include the “duty to defend” and the implied obligation of “good faith and fair dealing”.  These insurance covenants are triggered when a claim is made for a potentially covered risk or injury.  When a third party initiates a claim, the insurance carrier has an obligation to promptly and fairly investigate the claim in good faith and provide the insured with a legal defense.

If the insurance carrier fails to exercise reasonable care or unreasonably, acts or fails to act, in a manner that deprives the insured of the benefits afforded and bargained for under the insurance policy, the insurance carrier is in breach of their duty to defend and their implied covenant to act in good faith and fair dealing.  A bad faith insurance claim generally stems from this scenario.  When a carrier fails to defend and/or indemnify their insured this may constitute “bad faith” by the insurer.

By law an insurance company has an obligation to act in good faith and duly defend their insured.  The insurance carrier breaches this obligation and is found to have acted in bad faith when they blatantly disregard the facts and act against the best interests of their insured.  A bad faith insurance claim is most evident when liability is clear and the insured is exposed to a large judgment, despite this knowledge, a carries refusal to tender the insurance policy, constitutes bad faith.

What Types of Behavior Constitute Bad Faith Insurance Practice?

Consequently, an insurance company must not find a way to evade its obligation to investigate a claim, defend its insured and/or payout for covered injuries and damages. Common reasons an insurance company is found to be acting in “bad faith” include:

• Unreasonable denial of coverage
• Unreasonably denies a claim
• Unreasonably delaying the claims process
• Unreasonably delaying payments due
• Unreasonably withholding benefits
• Unreasonably declining a fair settlement offer
• Extending unreasonably low settlement offers
• Knowingly underpaying a claim
• Extending a low settlement offer well below the true value of the case
• Failing to deny a claim within a reasonable period of time
• Failing to payout a claim within a reasonable period of time
• Failing to respond to demands or time-limit demands for settlement
• Failing to provide a reasonable explanation for denial of coverage
• Failing to maintain adequate investigative procedures
• Failure to promptly investigate a claim
• Failing to conduct a reasonable claim investigations
• Failing to disclose policy limits
• Failing to engage in settlement negotiations
• Failing to reach a fair and reasonable settlement when liability is clear
• Failing to convey pertinent information to the Insured
• Deceptive practices to avoid paying claims
• Deceptive, coercive or abusive litigation conduct

What Types of Damages are available in a California Bad Faith Insurance Claim?

If an insurance company is found to have acted in bad faith, they may be liable for: Compensatory Damages, Punitive Damages, and Attorney Fees. Our previous articles discussing compensatory damages and punitive damages are linked below:

• What are Compensatory Damages? http://dianalegal.com/personal-injury-personal-injury-damages-compensatory-damages/
• Compensatory Damages in a Personal Injury Action: http://dianalegal.com/personal-injury-damages-compensatory-damages-for-personal-injuries/
• What Are Punitive Damages? http://dianalegal.com/fraud-i-damages-i-civil-litigation-what-are-punitive-damages/
• A discussion on the differences between punitive damages and compensatory damages: http://dianalegal.com/fraud-i-damages-i-civil-litigation-punitive-damages-vs-compensatory-damages/

If you believe your insurance company is acting in bad faith or you have suffered damages because your insurance company’s bad faith, we invite you to contact us today at 619-432-5145 for a free consultation with one of our experienced California Bad faith Insurance lawyers.