Jump to Navigation
  • ESPAÑOL

Insurers must act in good faith in handling liability claims

Dealing with an insurance company can be a frustrating and unpleasant experience under the best of circumstances, but attempting to recover damages for an auto accident can be especially maddening. California has laws that require insurers to use good faith in dealing with both their own policy holders and with persons who have a claim for damages against a policy holder.

The law with the broadest application is the insurer's implied obligation to act in good faith and deal fairly with a person making a claim. An insurer can be found to have acted in bad faith if it unreasonably fails to pay a claim or delays paying a claim where the liability of the policy holder to the claimant has been reasonably established. Insurance companies are not obligated to pay every claim they receive, but insurers must use reasonable efforts to investigate all of the circumstances of the case before it makes the decision to pay or not pay. If an insurer denies a claim, it must have a reasonable basis for doing so. Also, an insurer cannot put its interests ahead of the policy holder's interests; in other words, an insurer cannot refuse to pay a claim because it wants to save money.

The second law that governs claims practices by insurers is the California Insurance Code. This law identifies a number of acts that can be deemed "unfair claims settlement practices," including failing to effectuate the "prompt, fair and equitable settlements of claims in which liability has become reasonably clear.

The law allows a claimant who has been unfairly treated by an insurer to recover actual damages, which are usually in the amount of the claim, damages for mental suffering and attorney fees. Any person whose insurance claim has been denied may benefit from a consultation with an attorney who has dealt with such claims. Insurance bad faith is a complex area of the law that requires considerable professional expertise. The important message is this: just because an insurer denies a claim does not mean the claimant has no legal remedies.

Source: California Civil Jury Instructions 2331 and 2350, accessed on April 11, 2015

No Comments

Leave a comment
Comment Information
  • Consumer Attorneys California
  • Consumer Attorneys Association of Los Angeles, Attorney Member
  • Super Lawyers Rising Stars 2012
  • AVVO, Ratings, Guidance, The Right Lawyer
  • American Association for Justice, Formerly the Association of Trial Lawyers of America (ATLA)
  • Public Citizen
  • Public Justice, Americas Public Interest Law Firm
  • Pasadena Bar Association, Founded 1917
  • Multi-Million Dollar Advocates Forum
Subscribe to this blog's feed FindLaw Network

Quick Contact Form

Bold labels are required.

Contact Information
disclaimer.

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.

close

Privacy Policy

FIRM HEADQUARTERS

Killackey Law Offices, APC
200 South Garfield Avenue, Suite 108
Alhambra, CA, 91801

Phone: 626-999-0735
Toll free: 800-515-2183
Fax: 626-737-6046
Alhambra Law Office Map

  • Facebook
  • Twitter
  • LinkedIn