Insurance companies must undertake a thorough and unbiased review of each claim. When an insurance company fails to evaluate a claim fairly or requires the insured to take unreasonable steps to verify a claim, the company has breached its obligation of good faith and fair dealing, which is implied in every insurance contract.
Damages for insurance bad faith include payment of the benefits due to you and all consequential damages, including attorney’s fees, emotional distress damages, and even punitive damages in some cases.
Keep reading for more from our skilled San Luis Obispo personal injury lawyers, then call (805) 541-0300 to schedule your free consultation.
Understanding California insurance bad faith
Insurance bad faith occurs when an insurance company fails to uphold its duty to act fairly and in good faith towards its policyholders. This duty includes promptly and thoroughly investigating claims, communicating honestly, and paying valid claims without unreasonable delay. Under California law, an insurer can be held accountable for bad faith practices when violating these obligations.
Examples of bad faith practices
- Unreasonable denial of claims – Denying a claim without a legitimate reason or proper investigation.
- Delays in processing claims – Unnecessarily delaying the investigation or payment of a claim.
- Inadequate investigation – Failing to conduct a thorough investigation before denying a claim.
- Misrepresentation of policy terms – Providing false or misleading information about coverage or policy terms.
- Lowball settlement offers – Offering significantly less compensation than what is owed under the policy.
California insurance bad faith damages
If an insurance company denies your claim in bad faith, you may be entitled to recover various damages. These damages aim to compensate for the financial and emotional harm caused by the insurer’s misconduct.
Compensatory damages
Compensatory damages are intended to make the policyholder whole by covering losses incurred due to the denial of bad faith.
- Policy benefits – The amount the insurer should have paid under the policy if the claim had been handled in good faith.
- Economic losses – Additional financial losses resulting from the denial include unpaid medical bills, lost wages, and repair costs.
- Emotional distress – Compensation for the stress, anxiety, and emotional suffering caused by the wrongful denial of the claim.
Consequential damages
Consequential damages cover losses that directly result from the insurer’s bad faith actions but are not limited to the policy benefits.
- Out-of-pocket expenses – Costs incurred while resolving the claim, such as hiring legal counsel or paying for alternate accommodations.
- Loss of property – Compensation for property lost or damaged due to the denial, which the policy would have covered.
Punitive damages
Punitive damages are awarded to punish the insurer for egregious conduct and to deter similar behavior in the future. These damages are not tied to the policyholder’s actual losses but are based on the severity of the insurer’s misconduct.
Attorney’s fees and court costs
In some cases, the policyholder may also be entitled to recover attorney’s fees and court costs associated with pursuing a bad faith claim against the insurer.
How Ernst Law Group can help
Navigating a bad faith insurance claim can be challenging and requires a thorough understanding of the law and the insurance industry. At Ernst Law Group, our experienced attorneys are dedicated to helping policyholders fight against unfair insurance practices and secure the compensation they deserve.
Our approach
- Case evaluation – We will review your case in detail to determine if your insurer acted in bad faith.
- Evidence collection – Our team will gather the necessary evidence to support your claim, including correspondence with the insurer, expert testimony, and documentation of your losses.
- Negotiation and litigation – We will negotiate with the insurance company on your behalf and, if necessary, take your case to court to ensure you receive the full compensation you are entitled to.
Trust us to protect your rights
If you believe your insurance claim has been wrongfully denied, contact us online or call (805) 541-0300 for a free consultation. Our team is here to help you understand your rights and pursue the damages you deserve for your California insurance bad faith damages claim.
