When an insurance company handles your claim unreasonably or unfairly in California, they may be acting in “bad faith.” California law requires insurers to investigate, process and pay claims promptly and fairly. When your insurance company fails to meet these obligations, you may have grounds for a bad faith claim against them.
The state provides robust protections through statutes and regulations that define what constitutes bad faith. Insurance companies must handle claims honestly, communicate clearly and make reasonable settlement offers based on clear liability.
Common examples of insurance bad faith
Insurance bad faith occurs when insurers violate their duty to handle claims fairly. These violations can seriously impact your ability to recover from a loss. Here are key indicators that your insurer may be acting in bad faith:
- Making settlement offers well below policy limits despite clear liability, such as offering $50,000 for a covered loss worth $200,000, without legitimate justification.
- Conducting superficial investigations by ignoring damage evidence, skipping property inspections or dismissing expert reports that support your claim.
- Repeatedly missing the 15-day deadline for responding to your communications and claim documentation while providing no valid reason for delays.
- Telling you your policy doesn’t cover certain losses when it clearly does, or citing exclusions that don’t exist in your policy documents.
- Using aggressive depreciation tactics like deducting value from items that don’t normally wear out, such as house framing or foundation work.
- Retaliating against you for filing complaints with the California Department of Insurance by threatening to withdraw claim payments or cancel your policy.
- Withholding access to claim files, adjuster notes, damage photos and other documentation that California law entitles you to review.
These practices not only violate state regulations but can cause serious financial harm to policyholders trying to recover from losses.
Documenting all interactions with your insurance company is critical when dealing with potential bad-faith practices. Save all correspondence, take detailed notes of conversations and request important communications in writing. If your insurer’s conduct appears unreasonable or unfair, consider seeking skilled legal guidance to evaluate your situation and understand your options for pursuing compensation.