Is Your Auto Insurance Company Gambling on Your Financial Wellbeing?

When people purchase insurance, they expect their insurance companies to act in good faith and provide them with coverage in the event of an accident. However, in some cases, insurance companies act in bad faith by denying or delaying the payment of claims, causing significant financial damage to policyholders. 

What is Insurance Bad Faith?

Insurance bad faith is a legal term that refers to when an insurance company fails to fulfill its contractual obligations to its policyholder. It occurs when an insurance company unreasonably denies or delays an insurance claim, refuses to investigate a claim thoroughly, or undervalues a claim. Bad faith conduct can also involve an insurance company failing to communicate with its policyholder or misrepresenting the scope of coverage under a policy.

In California, the law imposes a duty of good faith and fair dealing on insurance companies. This means that insurance companies owe their policyholders a legal obligation to act in good faith and deal fairly with them when processing a claim. Under California law, insurance companies must investigate claims, communicate with their policyholders, and pay valid claims within a reasonable time frame.

Examples of Insurance Bad Faith

There are various scenarios in which insurance bad faith can occur in personal injury cases in California. Some of the examples are:

• Unreasonable delays in processing insurance claims
• Denying insurance claims frivolously or without a valid reason
• Failing to conduct a proper investigation of the claim
• Using deceptive tactics to deter policyholders from making claims
• Undervaluing or underpaying claims
• Refusing to defend or settle a claim despite the policy terms permitting it

Legal Remedies for Insurance Bad Faith in California

The California insurance code provides policyholders with various legal remedies when they have been subjected to insurance bad faith. These include:

1. Breach of Contract Lawsuit – A policyholder can sue an insurance company for breach of contract when an insurance company fails to pay valid claims under a policy.
2. Insurance Bad Faith Claim – A policyholder can bring an insurance bad faith claim if an insurance company’s conduct is found to be particularly egregious, such as the insurer’s wrongful denial of a claim.
3. Punitive Damages – If an insurance company’s conduct is so egregious that it shocks the conscience, a policyholder may be awarded punitive damages. These damages are designed to deter future wrongful conduct by the insurance company.

Conclusion

Insurance bad faith is a serious issue that affects policyholders in California who have been involved in personal injury cases. It is essential for policyholders to be aware of their legal rights and remedies under California law. By understanding the concept of insurance bad faith and the various legal remedies available, policyholders can hold insurance companies accountable and receive compensation for their losses.

Eduard Braun
Attorney at Law

877-533-4529

www.ebraunlaw.com