Following are questions and answers
concerning bad faith insurance law arranged in what we believe
is a logical sequence. Additional questions and answers are
added regularly, so please visit our site often. Please feel
free to make copies for non-commercial purposes.
1.
Q:
What can I do if my insurance
company denies a covered claim?
A:
You can file suit for breach of contract and possibly a tort
action seeking damages based on the insurer's bad faith handling
of the claim.
2.
Q:
Can recovery of damages for
an insurer's bad faith exceed what the insured is entitled to
receive under the insurance policy?
A:
Yes. In addition to what the insurer is required to pay under
the policy, if the denial is unreasonable, you may be able to
recover "consequential damages" (money you were required
to pay because of the denial) and "extra-contractual damages"
which are designed to punish the insurance company and to deter
it from wrongfully denying similar claims in the future.
3.
Q:
What obligation does my
insurance company owe me regarding my claim?
A:
An insurance company has an obligation or duty to handle a
claim reasonably, promptly, and in good faith.
4.
Q:
What is the duty of good
faith?
A:
It means that your insurance company must:
1. Pay or deny (adjust) your claim within a reasonable period
of time,
2. Timely respond to your phone calls and letters,
3. Inform you in writing why it is denying your claim specifying
each contract provision upon which it is relying,
4. Attempt to find a basis for paying the claim rather than
reasons to deny it, and
5. Treat you fairly.
5.
Q:
What obligations do I
owe my insurance company when making a claim?
A:
You must:
1. Submit your claim timely,
2. Provide all information reasonably requested,
3. Provide a statement under oath concerning the claim, and
4. Reasonably cooperate with the insurance company.
6.
Q:
Will the State of California
Department of Insurance (DOI) help me if my claim is unreasonably
denied?
A:
Possibly, but don't rely on it. They do not respond to every
complaint and sometimes their responses are inadequate. Never
wait to pursue a claim because you are waiting for the DOI to
investigate or act. You may never receive a response or the
response may come too late. If you fail to comply with a notice
requirement, you may lose your right to recover damages. If
you allow the statues of limitations to run, you will definitely
lose your rights to recover. In short, do not delay making a
legal claim.
7.
Q:
Is there any general
advice you can offer when making a claim?
A:
Yes. After calling the insurance company, always summarize
the complete conversation in a letter addressed to the person
to whom you spoke. The letter should refer to the date your
conversation took place and a copy should be retained. The initial
claim letter should be sent by certified mail, receipt requested.
