In every insurance contract, there exists an implied covenant of good faith and fair dealing that neither party will do anything that will injure the right of the other to receive the benefits of the agreement. That means that the term “bad faith” simply refers to a cause of action against an insurance carrier for a breach of this implied covenant of good faith and fair dealing.
Reasons For Bad Faith Claims Against Insurance Companies
Here are some of the typical reasons insurance companies get sued for bad faith:
Unwarranted denial of coverage
Failure to communicate pertinent information to the claimant
Failure to conduct a reasonable investigation of the claim
Refusal to pay the claim without investigating
Failure to deny or pay the claim within a reasonable period of time
Failure to confirm or deny coverage within a reasonable period of time
Failure to attempt to come to a fair and reasonable settlement when liability is clear
Offering substantially less money to settle than the true value of the claim
Failure to promptly provide a reasonable explanation for denial of a claim
Failure to enter into any negotiations for settlement of the claim
Failure to respond to a time-limit demand
Failure to disclose policy limits
When is an insurance company acting unreasonably in a claim?
Upon acceptance of a claim in whole or in part, every insurer shall immediately, but in no event more than 30 days later, tender payment in the amount accepted by the insurer. Again, violations of these regulations can also be used to establish the existence of bad faith by the carriers. It is important to understand that, generally, no one violation of these rules will constitute bad faith (although it is possible). More often than not, it is a combination of many violations, possibly repeated violations, that altogether combine to illustrate the existence of bad faith.
How do I file a bad faith claim?
The process can be very complicated which is why we recommend engaging with an experienced law firm like Walker Law. For reference, below are the steps associated with filling a bad faith claim against your insurance provider:
Review your insurance contract
Log details of your claim
Log the denial of your claim
File a complaint with California’s department of insurance