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What is bad faith in an insurance context?

On Behalf of | Apr 8, 2021 | Uncategorized

Insurance is great protection to have for life’s uncertainties. Whether it is protecting a home, a business, or even personal liability in case of an auto accident, it is indeed a necessity for practically everyone. But, when claims are filed in California, the insurance company operational profit mission comes front and center. There is no detail too small when an insurance provider wants to reduce the value of a claim or deny they are responsible entirely. This often leaves the claimant in limbo, and many times the tactics that adjusters use could actually be a violation of insurance law. This is termed bad faith in the industry, and it typically requires legal action to ensure an equitable settlement.

Insurer legal requirements

California law requires in general that all insurance companies conduct a timely investigation any time a claim is filed. The company claims adjuster conducts a complete evaluation of the case and then provides a response regarding coverage. Insurance companies can clearly deny claims when certain conditions of a policy are not met. The law just requires documented support of the denial. In addition, a difference of opinion between the claimant and adjuster with respect to a claim value is not bad faith either. Bad faith typically results from the company doing something proactively or failing to provide a legally required service when a claim is made.

Filing a bad faith lawsuit

Bad faith claims are not submitted to the insurance company. They are generally filed in state court complete with supporting evidence that the company was negligent or bargained in an unacceptable manner during a claim processing. This can include delaying a claim purposely as well as denying the claim outright. Evidence from either case that is brought out in court can be used in the additional legal claim against the respondent insurance company, and the claim connections are duly noted in legal paperwork.