INSURANCE BAD FAITH LITIGATION

Insurance bad faith occurs when an insurance company mistreats its policy holders (usually individuals and/or businesses). Due to the long history of insurance companies mistreating their insureds (whether through wrongfully denying coverage or refusing to accept a reasonable settlement offer within the policy limits), California has recognized that insurance carriers owe their policy holders a "covenant of good faith and fair dealing." Any behavior that frustrates the insured’s right to receive the proper insurance benefits can result in the insured bringing an action against the insurance company for “bad faith.”

Moreover, the serious, abusive and oppressive history of insurance companies has resulted in California making such behavior punishable through punitive damages. In fact, the mere threat of a bad faith action and the potential recovery of punitive damages is often enough to induce an insurance carrier to settle suits against their insureds.

Prominent examples of bad faith include:

Denial of Policy Benefits -Far too frequently, insurers simply refuse to pay the amounts that are clearly owed under their policies. Typical situations include the failure to pay for covered losses under homeowner's, life insurance and disability policies.
Bad Faith Failure to Investigate - An insurer has a duty to thoroughly investigate a claim to determine whether there are any facts that would indicate coverage is in order. Insurance companies are forbidden to turn a blind eye to an insured's plight and then plead ignorance.
Refusal to Defend - It is often true that the most valuable benefit provided by a liability policy is the insurer's duty to defend cases brought against the insured. Such insurance companies have a duty to defend an entire lawsuit whenever a single claim presented in that case is potentially covered. In addition, that duty to defend is implicated whenever either the facts alleged in the complaint or those a reasonably thorough investigation would reveal indicate such coverage is a possibility.
Bad Faith Refusal to Settle - Insurers also have a duty to settle any case in which liability is reasonably clear for the fair value of that matter - up to the limits of the policy. In making such decisions, the insurer must give the insured's interests at least as much consideration as it does to its own.

In examining bad faith cases, our firm offers free initial consultations to allow you to ask questions about what you might expect in pursuing a claim for compensation for your injuries. An early meeting permits you to make inquiry about various alternatives, about what is involved in making a claim, and about what is entailed in pursuing a lawsuit should that be necessary.

CASE RESULTS

$960,000.00 Refusal to Defend: Our client was sued by a former business associate for negligence. His own insurer refused to provide a defense to the claim and our client was forced to spend $250,000.00 to defend himself. Once we brought suit, our discovery efforts made it clear that the insurance adjustor's supervisor who made the decision to withhold a defense, was advised by the adjuster that coverage was in order. We filed a motion for summary judgment and the insurer agreed to pay $960,000.00 to settle the case.
$750,000.00 Failure to Pay for Home Repairs: Our client was insured by both a homeowner's policy and a home warranty policy. Her home developed a number of plumbing leaks and a plumber only made the situation worse. Our client was left homeless for more than two years as a result and required extensive home repairs. After extensive litigation and protracted mediation, we were able to recover approximately $750,000.00 - enough to repair our client's home and to compensate her for costs of alternative living arrangements an the emotional distress she suffered.
Refusal to Defend Against Fraud Claim: Our client was sued for allegedly being part of a very substantial financial fraud conspiracy. While the insurer defended his employer, it refused to defend our client as it claimed he had acted "willfully." We were able to establish that our client was at least entitled to a defense, even if the insurer had no duty to pay the underlying claim. As a result, we were able to recover the attorney's fees our client incurred to defend himself and the amount he paid to the claimants in settlement.
Refusal to Pay Life Insurance Benefits - Our client's parent had owned a life insurance policy for many years. She failed to pay a required premium and the policy was canceled. An application for reinstatement was filed, but the insurer delayed its review of the request until after the insured passed away. At that point, the insurer refused to pay the death benefit. We were able to demonstrate that the insurer had violated its own internal policies in reviewing the reinstatement request, had not timely acted on the request, and failed to properly investigate the matter. In the fact of that evidence, the insurer agreed to pay the entire policy benefit.