CALL US NOW
EMAIL US NOW
California allows policyholders and third-party claimants to sue insurance companies in certain situations. The most powerful tool is California’s bad faith law. An insurer that unreasonably denies, delays, or underpays a valid claim may face tort liability for bad faith, on top of the contract damages. California Insurance Code Section 790.03 (the Unfair Insurance Practices Act) and California’s common law bad faith doctrine protect claimants from insurer misconduct. Attorney Damoun Yazdi evaluates potential bad faith claims and insurance coverage disputes throughout Southern California.
Key Takeaways
- California Insurance Code Section 790.03 (the Unfair Insurance Practices Act) prohibits specific insurer misconduct including misrepresenting policy terms, failing to promptly investigate claims, and refusing to settle where liability is reasonably clear
- California common law bad faith allows a policyholder to sue their own insurer for tortious breach of the implied covenant of good faith and fair dealing. Damages can include the policy benefits plus consequential damages and potentially punitive damages
- Third-party claimants (people injured by the insured) have more limited rights against the at-fault party’s insurer, but may have excess judgment rights when the insurer refused a reasonable settlement within policy limits (Crisci v. Security Insurance Co., 1967)
- California’s Fair Claims Settlement Practices Regulations (10 CCR Sections 2695.5 and 2695.7) set specific claim handling time requirements, and violations are evidence of bad faith
- California’s two-year statute of limitations applies to bad faith claims (CCP Section 335.1)
Nathan Metcalfe
My car accident was chaotic, but Damoun provided clarity and order in the aftermath. Highly recommended for anyone who needs a professional to help them on their case.
When an Insurer Acts in Bad Faith
Unreasonable denial of a valid claim: If your insurer denies a claim without a reasonable basis, that is bad faith. For example, denying a clear liability claim after the at-fault driver received a traffic citation can support a bad faith claim.
Unreasonable delay: California’s Fair Claims Settlement Practices Regulations require insurers to acknowledge a new claim within 15 calendar days (10 CCR Section 2695.5(e)) and to accept or deny it, in whole or in part, within 40 calendar days of receiving proof of claim (10 CCR Section 2695.7(b)). Insurance Code Section 790.03(h) separately identifies failing to acknowledge and act reasonably promptly on a claim as an unfair claims settlement practice. Unreasonable delay beyond these periods without justification is evidence of bad faith.
Low-ball settlement offers: Offering a fraction of clearly documented damages without a reasonable basis is evidence of bad faith.
Failure to defend: If your own insurer fails to defend a lawsuit when the claim falls within policy coverage, that is a clear bad faith breach.
Your Rights Against Your Own Insurer
Under California bad faith law, you can sue your own insurer for: (1) all withheld policy benefits; (2) consequential damages caused by the denial (such as medical debt, lost wages due to delayed treatment); (3) emotional distress; and (4) punitive damages if the insurer acted with malice, fraud, or oppression under Civil Code Section 3294. Contact Attorney Yazdi if your insurer is denying, delaying, or underpaying a valid claim.
Contact The Accident Network Law Group About Your Insurance Dispute
If your insurance company has denied, delayed, or underpaid a valid claim, Attorney Damoun Yazdi and the team at The Accident Network Law Group can evaluate whether your insurer acted in bad faith and pursue the compensation you are owed. We handle bad faith and insurance coverage disputes on a contingency fee, No Recovery No Fee basis, so there is no cost to you unless we recover on your behalf, and every consultation is free. We serve clients in Costa Mesa, Riverside, Rancho Cucamonga, Apple Valley, Victorville, and throughout Southern California, with services available in English and Spanish (se habla espanol).
This content is for informational purposes only and does not constitute legal advice. The outcome of any case depends on its specific facts and circumstances. Past results do not guarantee future outcomes. Contact The Accident Network Law Group for advice about your individual situation.
