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Few events are as stressful as a sudden, unexpected accident. When we get into a workplace injury, a car accident, or suffer property damage to our homes, we spend time, money, and effort into righting these events. In these cases, we typically rely on our insurance providers to help us out in the process, acting within our best interests to help us receive the benefits we deserve.
But what happens when these insurance providers don’t fulfill their obligations? Sometimes, insurance companies may delay investigations, exercise poor communication, or even outright refuse to pay damages, despite overwhelming evidence to the contrary.
These companies are acting in bad faith, and you are legally protected from these actions. If you’ve been the victim of bad faith insurance, contact a San Diego bad faith insurance attorney at Dawson & Rosenthal, P.C. We can help you fight for your right to fair and just compensation.
Bad Faith Insurance Resources
- What is Bad Faith Insurance?
- First-Party vs. Third-Party Claims
- Bad Faith Insurance Examples
- California Bad Faith Laws
- How to Prove Bad Faith
- What Can an Attorney Do to Help?
What is Bad Faith Insurance?
In the state of California, insurance companies are legally obligated to act in good faith. This obligation arises from the insurer’s “duty of good faith and fair dealing.” Under the duty of good faith, an insurer must uphold certain standards and obligations when handling a claim, including:
- Equal Consideration. An insurer must treat the claimant’s interests as equal to the insurer’s financial interests.
- Reasonable investigation. An insurer must conduct a prompt, thorough, and unbiased claim investigation. If it fails to do so before denying a valid claim, it can constitute bad faith.
- Fair application of policy terms. An insurer must reasonably interpret and apply the language and terms of the insurance policy.
- Promptly pay valid claims. An insurer must promptly pay valid claims. Delaying or denying benefits without a reasonable basis can constitute bad faith.
Additional types of bad faith that Dawson & Rosenthal typically does not handle include bad faith arising from:
- Duty to indemnify. An insurer must be able to pay a settlement or judgment against the policyholder, up to their coverage limit.
- Duty to defend. An insurer has an obligation to defend the policyholder against any claim, including a lawsuit that isn’t necessarily covered by the policy.
- Duty to settle reasonably. In California, an insurance provider must explore settlement as an option for the policyholder, in the event that further lawsuits would expose the policyholder to damages beyond the coverage limits.
If an insurance provider fails to fulfill any number of these duties, they may be considered to be acting in bad faith and you should speak with a knowledgeable San Diego bad faith insurance attorney as soon as possible.
Types of Bad Faith Insurance in California
Generally, there are two types of insurance claims: first-party claims and third-party claims.
- First-party bad faith claims are those brought by the policyholder directly against his or her insurance company. For example, a bad faith claim brought by a driver against his or her insurer for refusing to pay an auto-collision claim after an automobile accident.
- Third-party bad faith claims are those brought against an insurance company by a party who is not a named policyholder. This happens most commonly in liability claims, such as when a driver is rear-ended and files a claim with the other party’s insurance company.
Generally, Dawson & Rosenthal only handles first-party bad faith claims.
What Are Some Examples of Bad Faith Insurance?
Instances of bad faith insurance can include:
- Denial of coverage for seemingly no reason - and despite strong evidence supporting the claim.
- Paying only partial benefits for a claim.
- Failure to communicate important information to the claimant, such as policy provisions that provide for coverage or additional benefits.
- Failure to conduct a prompt, reasonable, thorough, and unbiased claim investigation.
- Failure to promptly pay a valid claim.
- Unreasonably or unfairly interpreting or applying the terms of the policy to the claimant’s detriment.
Low-balling the claimant – i.e., offering significantly less money than what the claimant is entitled to receive under the policy.
- Failure to defend a third-party claim.
- Refusing a reasonable settlement offer from a third party.
Any combination of these may be grounds for a bad faith claim against an insurance company. If you’ve experienced any of these, contact the San Diego bad faith insurance attorneys at Dawson & Rosenthal, P.C. to explore your legal options today.
California Bad Faith Insurance Law
Laws regarding bad faith claims vary from state to state. In California, policyholders are protected under the Unfair Insurance Practices Act – also known as California Insurance Code INS § 790.03. This law officially defines unfair and deceptive acts or practices by insurance companies and prohibits them from knowingly committing practices such as:
- Misrepresenting pertinent facts to claimants.
- Failing to adopt reasonable standards for investigations.
- Not attempting in good faith to facilitate prompt, fair, and equitable settlements of claims.
- Unnecessarily delaying an investigation or payment of claims.
- Directly advising claimants not to seek the services of an attorney.
It is also important to note that there is a statute of limitations regarding bad faith claims. In California, the statute of limitations begins when the insurer refuses to arbitrate the issue. The statute of limitations regarding bad faith insurance claims can be complex and somewhat confusing because it depends on the nature of the cause of action.
- If the claim came about due to a breach in contract, the statute of limitations is four years, and compensation is limited to damages recoverable according to the contract.
- If the claim is a tort, in which one party suffered harm, the statute of limitations is two years, and compensation includes any damages that came about as a result of the harm.
Discerning these two can be a complicated matter when it comes to bad faith insurance. As such, it’s highly recommended to consult an experienced San Diego bad faith insurance attorney. The San Diego bad faith car insurance lawyers of Dawson & Rosenthal, P.C. have the skills to understand the distinctions, and act accordingly on your behalf.
How Do You Prove a Bad Faith Insurance Claim in California?
If your insurance provider has been acting in bad faith, you have the right to file a lawsuit against the insurance company. However, despite state laws enforcing unfair practices by insurers, these claims are common law claims, not statutory claims.
In California, common law bad faith claims require the policyholder to prove two things:
- That benefits due according to the policy were withheld. This requires proof that you not only had a valid claim under your policy, but also that your claim was denied by the insurer.
- Withholding of the compensation was unreasonable or without proper cause. This can be substantiated by any instances of bad faith mentioned above.
In order to proceed with a bad faith lawsuit, it’s highly recommended to do the following:
- Document everything. This includes up-to-date status updates on the denied claim, any direct correspondence with the company, and any detailed descriptions of the company’s actions, including the date on which they occurred.
- Request the claims adjuster to provide written documentation stating an explanation for his or her decision. If they deny this request, send the insurance company a letter indicating that you feel they may have acted in bad faith. Highlight any explicit reasons why you think so, including actual facts and not opinions.
- Contact a reliable San Diego bad faith insurance attorney. They have all the skills and familiarity necessary to give you the peace of mind during this stressful time.
Additionally, it may be worthwhile to file a complaint with the California Department of Insurance. Although they are not obligated to force the company to settle on your behalf, they may be able to find definitive evidence of bad faith and fine them accordingly. This can serve as another piece of evidence to help build your case against the company.
Why Do You Need a Bad Faith Insurance Attorney?
In bad faith insurance claims in California, it’s almost always recommended to seek the services of a qualified bad faith insurance lawyer in San Diego.
- Insurance companies are large corporations that have the resources necessary to take advantage of its policyholders. A skilled attorney can level the playing field with his or her experience and give you the peace of mind to know that there is someone fighting for your rights.
- In the state of California, third-party bad faith claims are rarely acknowledged, due to nuances in how the courts interpret precedence regarding insurance law. Typically, they are only valid when a third party fails to settle or properly defend a settlement – and even in those cases, the claim typically has to be brought by the policyholder in order to proceed, effectively making it a first-party claim. An attorney can navigate those confusing classifications, enabling you to make the best attempt at a bad faith insurance claim.
- A lawyer can help you seek out the best methods of evidence-gathering, giving you recommendations on which documentation can be most effective in proving bad faith.
- An insurance attorney has all the experience to know what is required in an effective bad faith lawsuit, equipped with the knowledge and resources to act in a timely manner.
If you believe you have a bad faith insurance claim in San Diego, contact the attorneys of Dawson & Rosenthal, P.C. immediately.
Dawson & Rosenthal | Trusted San Diego Bad Faith Insurance Lawyers
At Dawson & Rosenthal, P.C., we represent clients and policyholders who have been unfairly delayed in their claims in San Diego. With decades of combined experience, we have a reputation for achieving results in a wide variety of bad faith insurance cases, including those related to homeowner’s insurance, auto insurance, and even healthcare.
With compassion and experience, we offer the guidance you deserve in this stressful time. Let us worry about the complexities of a bad faith insurance claim – contact us today for a free consultation.
“I have worked with the attorneys at Dawson and Rosenthal on several cases. In my opinion, they are the best legal team in the country if you have a case involving bad faith insurance. The firm will only take a handful of cases and litigate them to their fullest extent ensuring maximum payout for their clients. I have specifically worked with Sander Dawson several times and he is not only a legal genius, but a beast in the courtroom. It is no surprise that they are pulling verdicts like 80 million.”