Insurance bad Faith is a tort claim against an insurance company that has intentionally failed in carrying out its fiduciary duty an insured individual or business. Under federal and California state laws an insurance company owes persons covered as well third party claimants an “implied covenant of good faith and fair dealing”. Under this law an Insurance company can be sued for both a contract claim and a tort claim. Under a contract claim plaintiff will receive only those damages suffered; while under the tort claim most U.S. jurisdictions allow for the issuance of Punitive Damages.
Punitive damages are given because Insurance companies are required to pay claims properly and promptly in “Good Faith”. When insurance companies deny full payment, low ball, discount, pay late, or attempt to not pay out claim at all based on Bad Faith, plaintiffs are able to seek a tort claim against insurance companies. This allows for the issuance of Punitive Damages by the plaintiff (usually the insured party) against the insurance company.
Standards Insurance Companies Must Comply With? – California Insurance Bad Faith Laws
The acts of the employees of insurance companies are impugned to the Insurance company itself. California Insurance Code Section 790.03 places standards that must be followed by Insurance companies in dealing with insurance claims; failure to comply with these standards will subject insurance companies to Tort Claim and thus Punitive damages. Some of the standards are listed below.
- Misrepresenting to claimants pertinent facts or insurance policy provisions relating to any coverage at issue.
- Failing to acknowledge and act reasonably promptly upon communications with respect to claims arising under insurance policies.
- Failing to adopt and implement reasonable standards for the prompt investigation and processing of claims arising under insurance policies.
- Failing to affirm or deny coverage of claims within a reasonable time after proof of loss requirements have been completed and submitted by the insured.
- Not attempting in good faith to effectuate prompt, fair, and equitable settlements of claims in which liability has become reasonably clear.
- Attempting to settle a claim by an insured for less than the amount to which a reasonable man would have believed he was entitled by reference to written or printed advertising material accompanying or made part of an application.
- Failing, after payment of a claim, to inform insured or beneficiaries, upon request by them, of the coverage under which payment has been made.
- Making known to insured or claimants a practice of the insurer of appealing from arbitration awards in favor of insured or claimants for the purpose of compelling them to accept settlements or compromises less than the amount awarded in arbitration.
- Failing to settle claims promptly, where liability has become apparent, under one portion of the insurance policy coverage in order to influence settlements under other portions of the insurance policy coverage.
- Directly advising a claimant not to obtain the services of an attorney.
- Misleading a claimant as to the applicable statute of limitations.
What is Bad Faith and Good Faith?
Insurance Company has a duty to its policyholders or third party claimants to act in Good Faith. Under the Common Law System their is an implied duty of good faith and fair dealing in any contractual relationship between two parties. Some of the instances where Insurance companies have acted in Bad Faith is listed below
- The insurance carrier’s improper investigation and valuation of the damaged property
- Insurance companies refusal to even acknowledge the claim at all.
- Denial of health insurance claim
- Denial of Life insurance
- Denial of workplace injury claim
- Denial of mental anguish claim
- Failure to defend insured meaningfully and immediately and entirely.
- Improperly refusing to defend a lawsuit or
- Improperly refusing to pay a judgment or settlement of a covered lawsuit.
- Failing to Properly and timely investigate ad claim – Insurance companies have a duty to investigate claim before denial
California Insurance law also contains a duty to a third party, the duty to settle a claim that is reasonably clear against a policy holder within the limits of the policy. If an insurance company has denied the claim in bad faith and failed to defend, indemnify of settle it may be liable for the entire amount as well as punitive damages. Insurance Bad Faith Lawyers from Downtown LA Law will protect your rights against Insurance Companies.
What are Punitive Damages? – How Can I Recover Punitive Damages in a Insurance Dispute Lawsuit
Punitive damages are awarded by a jury or a court when the plaintiff has proven to the court that an insurance company has acted in bad faith. If proven the Insurance company may be liable for punitive damages.
The purpose of Punitive damages is to discourage Insurance Companies from acting in Bad Faith in future matters with its policy holder or third party claimants. Its purpose is to change the conduct of the defendant Insurance Company. In doing so the amount awarded be excess of the actual damages sustained by a plaintiff.
Punitive damages are not given in contract claims. As a result United States law has allowed for plaintiff in Insurance bad faith cases to seek a claim under a Torts action. This means that a plaintiff can seek punitive damages against an insurance company that has acted in bad faith in excess of the actual damages sustained.
Based on the Supreme Court Punitive Damages must not exceed 10 times the actual damages of a plaintiff. A famous example of an Insurance Bad Faith case in which the court awarded punitive damages is State Farm Mutual Automobile Insurance Co. v. Campbell where $145 Million dollars was awarded.
How to win an Insurance Bad Faith Lawsuit – Insurance Lawsuit Legal Guide
One increasingly useful tool used by Bad Faith Insurance Attorney is to show the court a pattern of behavior in the insurance company which would be inline with bad faith practices and actions. There are several ways to prove a pattern of bad faith practices including.
- Training manuals and handbooks provided by insurance companies to their new employees which display a tacit consent or an outright policy of bad faith practices.
- Incentive programs in the company which induce and reward bad faith practices
- Other company document such as memos, conference and meeting handouts managerial reports and performance evaluations
- Insurance company claims handling procedures
Our Goal is Your Goal: To Fight against unscrupulous insurance companies and make sure you receive the recovery you are owed. We will protect your right to compensation from insurance companies located across the country including.
- United Health
- Liberty Mutual
- State Farm
If you have been denied your insurance claim. You may have a right to punitive damages under California state law.
Statute of Limitation for Filing an Insurance Bad Faith Claim in the State of California: Courts place a time limited time period to file a lawsuit. The statute of limitations for insurance dispute claim caries based upon the cause of action that is used. A cause of action based on a contractual obligation is 4 years, while a cause of action based on a tort action is 2 years. In certain instances court will waive the statutory time limit including where the insurance company mis advises or lies to the insures about the time period they have to file a claim.
How do I protect My Rights against Bad Faith by an Insurance Company
If you believe you have a claim against an insurance company because of a denial of your health insurance claim, denial of employment claim, of failure to pay a claim you believe you have a right to, it is advised to contact a Los Angeles Insurance bad faith attorney. Our Downtown LA Law lawyers will provide you with skilled and determined representation in defending your rights against insurance companies who have not met their fiduciary duties to their policy holders. For a Free Consultation regarding your claim against an insurance company call (855) DT-LA-LAW