What Is ‘Insurance Bad Faith’ and When Can I Sue an Insurance Company?

In California, insurance companies are held to a high standard of care toward their own insureds and must act fairly and in good faith in discharging its contractual responsibilities during personal injury cases. This includes the duty not to withhold unreasonably payments due under a policy.

What is “Good Faith” in Insurance and Personal Injury Cases?

The implied covenant of “good faith” has three basic principles:

  • Neither party can do anything that will injure the right of the other to receive the benefits of the agreement.
  • An insurer cannot “put its own interests before those of the insured
  • An insurance carrier must “give at least as much” consideration to the interests of the insured as it does to its own interests.

Prior to 1979, the implied covenant of good faith insurance extended to both your own insurer and the other person’s insurer against whom you assert a personal injury claim. However, in 1979 the California Supreme Court ended bad faith insurance claims against another person’s insurer in the case of Royal Globe Ins. Co. v. Superior Court, (1979) 23 Cal.3d 880. As a result, insurers for a negligent party now routinely deny, delay and defend cases with impunity.

What are “Bad Faith” Insurance Claims?

Since 1979, Insurance Bad Faith claims can only be made against your own insurer. Most commonly, this occurs with Uninsured Motorist Claims or the denial of health, disability or Homeowner’s coverage.

What Are Examples of Bad Faith Insurance Claims?

Here are examples of bad faith conduct in Uninsured Motorist Claims cases:

  • Failure to timely pay the UM policy benefits to the insured
  • Taking the position that liability is contested when the investigation indicates there is no merit for such;
  • Failing to “conduct and diligently pursue a thorough, fair and objective investigation;”
  • Ignoring the opinions of treating physicians, or other evidence favorable to the insured;
  • Focusing on the defense medical report instead of looking at the entire medical picture;
  • Manipulating the defense medical examination by engaging a physician who does these exams for insurance companies on a regular basis, including the insurer in the case at hand;
  • Refusing to honor the claim at the outset and forcing the insured to seek counsel and arbitrate to get what is owed;
  • Failing to respond to offers to resolve the claim;
  • “Low balling”;
  • Entering into prolonged litigation unnecessarily; and
  • Using computer programs to create results that undervalue the claim by failing to input complete and accurate information, or using the results to create the impression that the claim is worth less.

Do You have a “Bad Faith” Insurance claim?

At Kerr & Sheldon, we take Insurance Bad Faith claims on a contingency basis. We do not charge any fee until we have recovered money for your injury. We also advance all costs and expenses, so that you pay nothing at all until your case is resolved. Contact usnow for a free case evaluation.

Get the legal advice for your personal injury claim now!
Call 714-531-5900 for a free consultation.

If you want experienced personal injury lawyers to aggressively pursue full and fair compensation for your claim, contact Kerr & Sheldon to schedule a free case evaluation. If you are unable to travel due to your injury, we will come to you.