Bad Faith Insurance: What constitutes bad faith insurance in California

bad faith insurance in california

Insurance agreements are contracts that obligate the insured to pay premiums in exchange for compensation on legitimate claims that the insurer promises.

The contract also implies that both parties deal in good faith and fair dealing, meaning they will treat each other honestly and not deny the other party the benefits as agreed upon in the contract.

Lawsuits on bad faith insurance occur when the insured claims that the insurer unfairly denied them their compensations as agreed, through deceit or technicalities. Here are four that your insurer may have acted in bad faith:

Failure to Investigate

The insurer has the duty to investigate the insured’s claim thoroughly before denying it. The investigation requires them to examine the insured’s documents like proof of loss statement, medical records, proof of damages, and other documents.

For instance, if a representative from the insurance company denies the disability claim based solely on their interpretation of the insured’s medical records without having an expert examine it, the holder can assert that they failed to perform a full investigation.

If you are under the impression that your insurance company has not examined all the facts of your claim (not asking for/refusing to accept further documentation, ignoring important aspects of your claim, etc), then this can be grounds for bad faith.

Failure to Indemnify

Indemnification is defined as obligating one party, the insurer, to compensate the other party for certain liabilities and losses. If the insurer fails to fulfill this duty, then it can constitute bad faith.

The insurance company could be delaying the indemnification process by either asking for documents that seem unnecessary for the insured’s claim or unreasonably prolonging the process that will inevitably lead to the claim’s denial. Many insurance claims are typically resolved within 30 days, although this may vary depending on how complex your case is.

If your claim is taking significantly longer than this, and the insurance company’s explanation for the delay is insufficient this can also be considered bad faith.

Failure to Defend

The duty to defend is the insurer’s responsibility to defend the insured from claims made against them. For instance, the insured was legally accused by a third party, the insurer then has the duty to hire a lawyer and pay for their services to defend the insured.

Suppose the insurance company denies coverage and refuses to defend the other party. In that case, the policyholder can request a declaratory judgment that asks the court to review the policy and claims to see if the company must defend the insured.

The Law Protects You from Bad Faith Insurance

The state of California has enacted Fair Claims Settlement Practices Regulations to protect policyholders from bad faith practices. The Act mandates that claims be handled with fairness and clear communication between the two parties.

The law may have varying models from each state, but its main purpose is to protect the insured from unjust behavior by the insurers during the claims process. Some laws will also order the insurer acting in bad faith to compensate more than the owed amount for unjustly denying a claim.

Punitive damages may also be awarded to the policyholder when the insurer’s compensation was deemed insufficient by the court. It was made to punish the insurer for bad faith and discourage them from repeating the practice.

A Reliable Bad Faith Legal Counsel

Consulting with lawyers with experience in handling bad faith insurance claims will also help strengthen your claim and protect you from further denial. Haffner Law offers free consultations for people seeking legal advice about bad faith insurance.

Visit our bad faith insurance services page to know more about how we can help you get your payout claims. Book a consultation with us to find out how you can get compensation from your bad faith insurance claim.

 

Understanding First-party and Third-party Claims and Insurance Bad Faith

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Most people know that after a personal injury accident, they may be able to get compensation from insurance policies. What many don’t realize is that there may be more than one insurance policy and insurance provider to consider.

Because there could be multiple policies, if a person does not get just compensation, an insurance bad faith claim may be involved. This article will clarify the difference between first-party and third-party insurance claims and how bad faith plays into these situations.

If you need help with all these now, call 1-844-HAFFNER to speak to a personal injury attorney right away.

First-Party Claims

A first-party insurance claim is a claim that is filed by the person who is insured, with their own insurance company. The person filing the claim is also the one paying the monthly bill on their policy.

If this person gets into a personal injury accident — a car collision, for example — they will notify their own insurance company of the situation and will ask the insurer for fair compensation under the terms of the contract.

The following policy types are common first-party insurance claims:

  • Medical bills covered by Med Pay
  • Collision and comprehensive coverage
  • Coverage for a rental car fee while waiting for repairs
  • Uninsured motorist
  • Underinsured motorist
  • Even towing

Third-Party Claims

Third-party claims are made by someone who is not the policyholder with the insurance company of another person, who is likely the cause of a personal injury.

If a car driver suffers injuries in a vehicular accident, for example, and a different truck driver is the cause of this accident, then the car driver can file a third-party claim with the insurer of the truck driver and receive fair compensation, based on the terms of the contract with the truck driver.

Determining Who Is at Fault

In the examples for both the first- and third-party claims, the party at fault in the accident was either easily identifiable or not entirely relevant. But what if the situation is not as clear-cut as those mentioned above?

In some complicated cases, where the party at fault in the accident may not be readily apparent, those who suffered injuries may need to make multiple claims to different insurers. This may involve both first- and third-party claims.

Insurance Bad Faith

Insurance bad faith happens when an insurance company refuses to compensate an insured person fairly, despite being covered by their policy. Insurance holders can allege bad faith against their insurers if they experience the following:

  • Not enough compensation based on the terms of the contract
  • Denial of compensation, despite being covered
  • Compensation is unreasonably delayed

In California, only first-party claims are entitled to allege bad faith against insurers. This means that if it is a third-party claim, the person cannot allege bad faith against the insurance company in the state.

In the third-party claim example, where the car driver is asking for the truck driver’s insurance company for compensation, if the insurer denies the claim, the car driver may not be able to allege bad faith. This is because insurance companies in California only have a duty of good faith with their own policyholders.

Legal Counsel

After a personal injury accident, the best course of action is to seek legal counsel. The guidance of a proven legal team can help identify who is at fault, file claims towards the appropriate insurers, cover liabilities, and seek fair compensation.

There are already too many things to worry about in these situations. Help from the right personal injury lawyers can significantly lessen the burden.

Whether you are filing for a first-party or third-party claim, or considering claiming insurance bad faith against your insurer, speak to one of our attorneys first for guidance. Call us at 1-844-HAFFNER.

 

Spotting a Bad Faith Insurer: Red Flags to Look Out For

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California law states that all drivers and car owners must “establish financial responsibility” by buying auto liability insurance. As a law-abiding citizen, you pay your premiums diligently every month. In return, you trust that your insurer will compensate you accordingly when the need arises.

If your insurer fails in this regard, you may need the services of a bad faith insurance attorney.

As a law practice that has handled hundreds of personal injury and car accident claims in Los Angeles, we’ve become aware of the poor practices of insurance providers who act in bad faith — namely, avoiding to fulfill their obligations to their paying customers.

Practices of Bad Faith Insurers

How do you know that an insurance provider is acting in bad faith? Below are examples of their tactics:

  • Denying compensation and citing vague or complex clauses in the contract to justify their decision.
  • Denying compensation without explanation.
  • Refusing to provide the full compensation that clients are entitled to receive based on their policy coverage.
  • Misrepresenting the contract’s language to justify why the company is denying a claim.
  • Asking for an unreasonable amount and scope of documentation about the accident or injuries.
  • Citing laws that are outdated or do not apply to a client’s claim.
  • Delaying investigations or failing to thoroughly investigate a claim.
  • Lack of communication; failing to get in touch with the relevant parties in a claim.
  • Delaying payments for awarded compensation.

Signs of a Bad Faith Insurance Provider

If you’re already in business with bad faith insurers, all that’s left to do is identify any bad faith practices being exercised against you and pursue a resolution you believe is best for you.

If you’re still in the process of searching for an insurance provider, here are red flags to be mindful of:

  1. Abysmal customer ratings – Client feedback on online forums and social media can give you an idea of an insurer’s shortcomings. Unhappy clients are rarely silent, especially in the age of social media.
  2. A track record for low settlement offers – Some would argue that low ratings do not automatically implicate an insurance company of bad faith practices, so another indicator would be if the company has a reputation for lowballing settlements.
  3. Vague contracts with unnecessarily complex wording – Have a trusted and experienced attorney review your insurance contract before signing it. If the document uses too many vague terms that leave a lot of room for misinterpretation, they might be used against you when you file a claim.
  4. Aggressive sales tactics – Agents who pressure you to sign on an insurance policy as quickly as possible are only looking to increase their commissions and aren’t too concerned whether the policy you’re buying is best for you. If you bite, you could be signing on to a policy with minimal coverage, a vague contract, and probable bad faith disputes.

Claim the Compensation You Deserve with Haffner Law

If you recently got involved in an accident and feel like your insurance company is dragging its feet in compensating you, consult Haffner Law’s bad faith insurance attorneys as quickly as possible.

Our L.A.-based lawyers have successfully won bad faith insurance claims for many clients in California. You can rest assured that we will do our utmost to do the same for you.

Contact Haffner Law at 213-514-5681 or submit an inquiry on our website.

(This is an attorney advertisement by Joshua Haffner)

What Non-Centralization of Bad Faith Insurance Lawsuits Mean

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The coronavirus pandemic has had a massive impact on the insurance industry, specifically on the business front. One of the outcomes was the increase of bad faith insurance claims against business interruption insurance providers. As with most things regarding the pandemic, the surges in business interruption coverage claims and lawsuits against insurers that fail to pay up are unprecedented. So, to better serve policyholders and business owners, motions were passed to centralize bad faith insurance lawsuits.

Haffner Law explains what centralized lawsuits mean, and why federal courts rejected the motions involving business interruption insurance claims.

The Pandemic and Its Impact on Businesses

When the outbreak first started and state and city governments imposed lockdowns in an effort to stop the spread of the virus, small and medium businesses were the first to experience significant declines in their daily and monthly revenues. Brick-and-mortar businesses in the leisure and hospitality industries, in particular, were severely affected by social distancing regulations and the widely implemented work-from-home employment arrangements.

As is the practice of sound business ownership, the owners of these small and medium businesses religiously paid insurance premiums for business interruption coverage. They have every right, therefore, to file insurance claims when business declined thanks to the economic ramifications of the COVID-19 pandemic.

Acts of “Bad Faith”

Under normal circumstances, businesses will have no issue claiming what they’re due from their insurance companies. Unfortunately, the overwhelming number of businesses that went under during the pandemic has put a strain on the insurance industry as a whole. As business entities themselves, insurers are also looking out for their own interests. Hence, reports about an increasing number of insurers denying business interruption coverage claims increased, and along with them, the bad faith insurance claims against insurance companies.

Motion to Centralize Lawsuits

A milestone ruling in August 2020 put an end to several plaintiff’s motions to centralize lawsuits filed by businesses seeking fair business interruption coverage against insurance companies.

Seeing that many of their peers have been victims of “bad faith” acts by insurers, many business owners (the plaintiffs) and law firms that do not specialize in insurance coverage lawsuits thought it beneficial to have coordinated, multidistrict litigation (MDL) in federal court. This motion is based on the premise that business interruption insurance claims related to the pandemic, the structure of the insurance policies, and the insurance laws governing them are broadly the same around the country.

MDLs are usually applied to lawsuits involving vehicular crashes, defective medical devices, drugs, etc. that involve many people. MDL proceedings allow courts to manage cases with a common issue better and more efficiently by centralizing or consolidating them into one case.

The Problems with Centralizing Business Interruption Insurance Lawsuits

The federal courts decided to decline the motion to establish an MDL for business interruption insurance lawsuits for these reasons:

  • The common core issues raised by the plaintiffs that sought centralization were superficial.
  • There are still too many unique variables for each lawsuit, and litigating them as one case might undermine the excess coverage that some plaintiffs are justly entitled to receive.
  • Forms and policy language between insurers may be similar, but each might have unique terminologies that would make each coverage different from one another.

The federal courts advise businesses to pursue claims and lawsuits individually instead. It is the most optimal approach to recovering claims considering the factors that make each business interruption claim unique.

Pursue Your Just Compensation with Haffner Law

These times have surely been difficult for you and your business. We can help ease your financial burden with our bad faith insurance claims services.

Assert your right to receive the compensation your business interruption insurance policy promises. Hire Haffner Law’s bad faith insurance attorneys to defend your claims and negotiate an optimal payout from your insurance company. Call us at 213-514-5681 or fill out the contact form on our website.

(This is an attorney advertisement by Joshua Haffner)

How to Appeal for Denied Health Insurance Claims

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A health insurance policy is not a guarantee that you will get reimbursed for all your healthcare expenses, or that your hospitalization costs will all be shouldered (whether in part or entirely) by your insurer. Insurance might be marketed as a customer-centric product, but remember that behind these products are companies that must look out for their financial welfare. In all fairness, they also need to vet applications so that only qualified claims will be reimbursed.

What happens if your insurance claim is denied? You can file an appeal if you think the outcome has no basis and is unjust. If all else fails, our bad faith insurance attorney in Los Angeles is only one phone call away; but for now, let’s focus on your appeal.

What to Do If Your Insurance Claim Gets Denied

If your insurer denies your claim, they will send you an official letter stating the reason for the denial and possibly quote clauses in your policy that presumably justifies this decision. Don’t panic or be disheartened right away if you get such a response because you can still file for an appeal.

Here’s what you need to do:

  1. Review the appeal process for your insurance company. It differs for every company. Talk to your agent, and ask whom to address your appeal, what documentation you need to prepare, the deadlines for submitting an appeal, and so forth. The information may be available on their website, but it always helps to discuss it with someone knowledgeable about this process.
  2. Review your policy. Take note of the reason your insurer cited for the denial of your claims. Review the clauses that supposedly invalidates your claim. It’s not yet necessary to consult an attorney at this point, but it would be helpful if you can go through those clauses with people who know how to pick apart the legalese and show the key points of your contract.
  3. Prepare your letter of appeal and supporting documents. It must contain your personal information and insurance details. State the reason cited for your claim’s rejection. Explain why you think the resolution should be the opposite and that your policy covers your recent medical procedure or treatment (this is why it’s advantageous to have an attorney advise you on the details of your insurance policy and how to argue your position). If it supports your claim, include other documents like a letter of medical necessity by your doctor, results from first tests and second opinions. These documents should explain why the treatments you received were necessary for your health condition. Finally, produce and keep copies of your appeal documents in case you need references later.
  4. Submit your appeal documents. You must make sure that your insurer has officially received your appeal, so consider sending the documents via:
  • Fax (you can get a confirmation for a successful transmission)
  • Certified mail (you can request a Return Receipt)
  • Personal delivery (you can note the time, date, and name of the staff who received your appeal documents plus note your delivery at the receptionist’s log)

If your insurer still denies your claim, you may persist with yet another appeal, or you can escalate your response by filing a bad faith insurance claim.

Haffner Law can assist with your filing. We have years and years of experience in dealing with bad faith insurance cases, and we always work our hardest to help our clients get the compensation they deserve.

Contact us via our website and schedule an appointment.

(This is an attorney advertisement by Joshua Haffner)