Posted in Insurance Law
The Statute Behind Bad Faith Claims
California law identifies specific practices insurers cannot engage in when handling a claim. Under California Insurance Code Section 790.03, an insurer commits an unfair claims practice if it knowingly commits certain prohibited acts, or performs them often enough to indicate a general business practice. The statute lists specific conduct rather than leaving the standard vague, which gives policyholders a concrete framework for evaluating how their claim was actually handled.
This specificity matters because it moves the conversation away from a vague sense that something felt unfair and toward a concrete comparison against conduct the legislature has already identified as improper.
What Kinds of Conduct the Law Targets
The statute covers a wide range of insurer behavior, including misrepresenting policy provisions, failing to acknowledge communications promptly, and not attempting in good faith to settle a claim once liability has become reasonably clear. It also addresses more aggressive tactics, such as compelling a policyholder to file a lawsuit by offering substantially less than what the claim is actually and demonstrably worth. A San Francisco insurance policy lawyer reviewing a denied or delayed claim will typically compare the insurer’s conduct against this specific list.
Why an Unreasonably Low Offer Matters So Much
One of the more common issues policyholders encounter is an offer that falls well short of what the evidence supports. The law requires insurers to conduct a genuine investigation, considering the evidence a policyholder submits, before making a settlement offer. An offer built on an incomplete investigation or one that simply ignores submitted evidence can itself be evidence of bad faith, separate from whatever the ultimate coverage dispute involves. A San Francisco insurance policy lawyer evaluating a lowball offer will often request the insurer’s internal file to see exactly what evidence was actually considered before the number was decided on.
Every Policy Carries an Implied Duty
Beyond the specific statutory list, California recognizes that every insurance contract includes an implied covenant of good faith and fair dealing. This means an insurer’s obligations extend beyond the literal words of the policy to how it actually treats the policyholder throughout the claims process. A pattern of delay, unexplained denials, or shifting justifications for a decision can support a bad faith claim even when no single act clearly violates the statute on its own terms.
Documentation That Strengthens a Bad Faith Claim
A handful of records tend to matter most when a policyholder is evaluating whether an insurer crossed the line into genuinely unfair conduct:
- All written correspondence with the insurer, including any formal denial letters received
- Internal claim notes and adjuster files obtained through the formal discovery process
- Any independent estimates or appraisals submitted and exactly how they were addressed by the insurer
- A clear timeline showing how long each stage of the claims process actually took to complete
Because bad faith often shows up as a pattern rather than one isolated decision, organizing this documentation chronologically tends to reveal issues that are harder to see when looking at any single document alone, in isolation from the rest of the file.
Getting an Honest, Detailed Read on Your Claim
Determining whether an insurer’s conduct rises to the level of bad faith requires comparing what actually happened against a fairly specific legal standard, not just a general sense that the process felt unfair or drawn out. The Law Office of Bennett M. Cohen has represented policyholders throughout San Francisco in disputes with insurers who delayed, denied, or underpaid valid claims, across both residential and commercial policies. If your claim has been handled in a way that feels dismissive or unreasonably slow, reviewing the specific conduct against California’s statutory standard is a genuinely reasonable place to start.
