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You pay your premiums every month. You follow the rules. Then, when something happens and you actually need your insurance, the company drags its feet or denies your claim outright. That’s not just frustrating. It might be illegal bad faith. California law holds insurers to specific standards when they’re handling your claim. When they don’t meet those standards, you’ve got options.
What Does Bad Faith Mean
Bad faith is what happens when your insurance company unreasonably refuses to pay a valid claim or handles your claim improperly. You’re not just a customer. You’re someone they owe a legal duty to treat fairly. Think about it this way. Insurance is a contract where you pay for protection. The insurer takes your money, promising they’ll be there when disaster strikes. When they breach that promise without justification, they’ve acted in bad faith. California Insurance Code Section 790.03 specifically prohibits unfair claim settlement practices. This gives you real protection when insurers decide to play games with your claim.
Common Examples Of Bad Faith Conduct
Some bad faith practices are obvious. Others? Not so much. Insurance companies have developed sophisticated ways to avoid paying what they owe. Here’s what you should watch for:
- Denying your claim without actually investigating it properly
- Delaying payment for months when there’s no legitimate reason
- Offering you pennies on the dollar for a claim they know is worth much more
- Refusing to return your calls or emails about your claim
- Twisting policy language to manufacture reasons not to pay
- Never explaining why they denied you in the first place
These actions violate the fundamental duty every insurer owes to its policyholders under California law.
The Duty Of Good Faith And Fair Dealing
Every insurance policy in California comes with something called an implied covenant of good faith and fair dealing. It’s not written in your policy. It doesn’t need to be. The law puts it there automatically. This covenant means your insurer can’t prioritize its bottom line over your legitimate claim. They must investigate thoroughly, respond promptly, and pay valid claims quickly. When they fail these basic obligations without reasonable justification, they’ve crossed into bad faith territory.
Unreasonable Claim Denials
Not every denial is bad faith. Let’s be clear about that. If your policy doesn’t cover something and the insurer denies it, that’s within their rights. Bad faith happens when the denial is unreasonable. When they ignore evidence supporting your claim. When they misinterpret straightforward policy language to manufacture an excuse not to pay. When they deny without bothering to investigate at all. A Hayes Valley Insurance Litigation Lawyer can evaluate whether your insurer’s denial was legitimate or whether it crossed the line into bad faith.
Investigation Requirements
California law doesn’t let insurers phone it in when investigating claims. They must conduct thorough, fair investigations that consider all available evidence. Not just the evidence that helps them deny you. They need to interview witnesses. Review expert reports. Actually examine the facts. Rushing through an investigation or deliberately ignoring information that supports your claim can constitute bad faith. The investigation also needs to happen within a reasonable timeframe. Dragging things out for months without justification? That’s another red flag.
Communication Failures
Your insurer can’t just ghost you. They’re required to communicate throughout the claim process. Ignoring your calls repeatedly demonstrates bad faith. So does failing to respond to emails or refusing to explain their decisions. You’ve got a right to know what’s happening with your claim. When they won’t tell you, there’s usually a reason, and it’s rarely good. The Law Office of Bennett M. Cohen represents policyholders who face these communication breakdowns. Often, these situations reveal deeper problems with how the company is handling the entire claim.
Lowball Settlement Offers
Here’s a common tactic. The insurer knows your claim is worth $100,000. They offer you $20,000 and hope you’ll take it rather than fight, that’s bad faith. Insurance companies bet that you’re desperate, tired, or don’t know any better. They’re counting on you accepting far less than you deserve. When they know the true value of your claim but deliberately offer a fraction of it, they’re acting in bad faith.
What You Can Do About Bad Faith
Document everything. Save every email. Keep copies of all letters, claim forms, and denial notices. Write down the details of phone conversations, including dates, times, and who you spoke with. This documentation becomes your evidence if you need to take legal action. You can potentially recover compensation for the emotional distress this causes. You can get your attorney fees paid. In cases involving particularly egregious conduct, you might even recover punitive damages designed to punish the insurer and deter future misconduct. A Hayes Valley Insurance Litigation Lawyer can review your situation and help you understand whether you’ve got grounds for a bad faith claim. Contact us today.
