Too many people who have paid premiums to an insurance company for years get an unpleasant surprise when they file a claim under their policies: the insurer’s former friendliness and accommodating attitude give way to suspicion, avoidance, and even threats. And it all happens at the very time that the loss that caused the claim is adding stress and anxiety to the insureds’ life.
The “Good Faith” Duty of Insurers
California has been a leader in recognizing the imbalance of power between insurance companies and their customers, and in rectifying it. Every insurance policy is deemed to include a provision that the insurer will act in good faith and deal fairly with the insured. If the insurance company violates that duty, it commits the tort (civil wrong) of bad faith.
The duty of good faith applies to all the insurer’s actions during the entire claims handling process, including its decision on whether the claim is covered and how much to pay on the claim.
The fact that insurers can’t legally act in bad faith provides insureds with some protection, as long as they are willing to make the effort to hold insurers accountable. It also has some deterrent effect on insurers: the threat of a bad faith action by insureds may dissuade the company from acting in bad faith.
Bad Faith Damages
When a bad faith action is brought, the insured isn’t limited to recovering only the amount of money due under the terms of the policy. Bad faith is a tort, and the insured can recover any damages suffered as a result of the bad faith. That includes such things as
- Lost earnings, rents, etc.
- Lost opportunities
- Lost use of property
- Costs of borrowing money needed because the insurer didn’t pay
In California, the damages may include emotional distress and even the medical expenses incurred because the stress affected your health.
You may be able to recover some attorney fees, as well.
Recovery of all these items requires a careful investigation of the case and a clear showing of the evidence that the insured really did suffer these losses. The more experience your attorney has in bad faith cases, the more successful you’re likely to be.
What Amounts to “Bad Faith”
Nothing shows the value of getting the services of an experienced bad faith attorney better than the fact that it is an act of bad faith for an insurer to advise the insured not to hire an attorney. Among the many other actions that may amount to bad faith are these:
- Lying to or deceiving the insured about the terms of the policy, legal deadlines, or other information essential to the claim;
- Trying to coerce the insured to accept less than is due (this includes threatening to appeal arbitration awards if the insured doesn’t accept a settlement);
- Not responding promptly to claims;
- Denying claims without a reasonable basis.
State Regulations of Insurer Conduct
California’s Department of Insurance has in place extensive regulations on insurance company conduct. Insureds can’t sue the insurance company for violating regulations, but an experienced bad faith attorney can use the violations as evidence of bad faith. General regulations apply to all insurers:
- Standards for file and record documentation;
- The insurers obligations when it comes to representations about the policy provisions and benefits;
- The insurer’s duties upon receiving communications;
- Training and certification of people in the insurance industry;
- Standards for prompt, fair and equitable settlements.
There are also regulations that apply to specific types of insurance.
Legal Help for a Complex Matter
Bad faith claims are both complicated and “fact-intensive.” At the Surrano Law Offices, we have decades of success in handling California bad faith claims, which means intimate knowledge of how insurers work and where the evidence of bad faith is likely to be found. Call us immediately if you have doubts about the way your insurance company is treating you. The initial consultation is free, and we have payment arrangements for every need, including contingency agreements when appropriate.