Following a car accident (or any accident or circumstance where the victim’s own insurance coverage is applicable), a personal injury victim often has to rely on his/her own car insurance to provide the protection and compensation he/she needs for the injuries, bills and pain and suffering which have arisen. The typical coverage from which bad-faith insurance claims arise under one’s car insurance is known as Uninsured/Underinsured coverage (see Uninsured and Underinsured Motorist Coverage for more information). Under California law, there is the common law rule known as the implied covenant of good-faith and fair dealing which is intrinsic to every contract. This rule requires the insurance company to treat their insured with the utmost respect and fairness in handling their claim and “this means that each party will not do anything to unfairly interfere with the right of any other party to receive the benefits of the contract” (see CA Civil Jury Instructions). Makes sense, as it’s the insured who pays a monthly premium for the sole purpose of ensuring that they’re protected should the need arise. What’s more, it’s the insured who allows the insurance company to be in business in the first place. But for the insured’s payment every month, the insurance company would not be in business. Typically, insurance companies violate the implied covenant of good faith and fair dealing by failing to provide adequate compensation to the victim based on the true value of the victim’s claim (see What’s the Value of a Personal Injury Claim), failing to timely respond to compensation requests, and failing to provide the victim with thorough and legally-based justifications for why the insurance company made its determinations. Aside from the common law responsibilities imposed on the insurance companies, certain sections of the Fair Claims Settlement Practices Regulations of subchapter 7.5 of Chapter 5 of Title 10 of the Code of California Regulations govern insurance companies’ conduct, particularly when a claim stemming from a personal injury is made. Section 2695.7 1 requires the insurance company to “immediately, but in no event more than forty (40) calendar days” after receiving proof of a claim, “accept or deny the claim, in whole or part” and “provide the claimant a statement listing all bases for such rejection or denial and the factual and legal bases for each reason given for such rejection or denial which is then within the insurer’s knowledge.” (1.(b)(1))
And every 30 days, “until a determination is made or notice of legal action is served …” the insurance company must “provide written notice of the need for additional time … and specify any additional information the insurer requires in order to make a determination.”
The first step in pursuing a bad-faith claim against your carrier is to be successful in your arbitration hearing. It is prima facie evidence of bad-faith if you demanded the policy limits and your carrier refused to timely pay it and then you later obtain the policy limits (or receive an award for more than the policy – even though the carrier only has to pay the policy) through an arbitration proceeding. You can also pursue a bad-faith claim against the carrier if they offered less than the amount awarded to you at arbitration. You will then be able to use all of your communications to the insurance company prior to arbitration wherein you sought settlement of your claim but the insurance company refused to comply with the applicable Sections (outlined above), along with other evidence of their violations of their implied duty of good-faith and fair dealing. Strong evidence of the insurance company’s bad-faith is their refusal to respond to your letters or comply with the law, especially after you informed them, on multiple occasions, to do so.
If you feel your insurance company has wrongfully denied, in whole or in part, your UM/UIM claim, contact our Insurance Claims Attorney to discuss your options against your insurance carrier and your rights under the law.