Holding Insurance Companies Accountable for Unfair Claims Practices

Insurance bad faith occurs when your insurance company fails to handle your claim fairly and in accordance with the law. This is not about a legitimate disagreement over coverage—it is about insurers who use delay, denial, and deception as business strategies to avoid paying claims they know are valid. In California, policyholders have some of the strongest legal protections in the country against this kind of corporate misconduct.

First-Party vs. Third-Party Bad Faith

First-party bad faith occurs when your own insurance company mistreats you on a claim you file under your own policy. This includes homeowners insurance claims for fire, water, or earthquake damage, auto insurance claims for vehicle damage or UM/UIM benefits, commercial property insurance claims, disability insurance claims, and health insurance claims. Third-party bad faith occurs when your insurer fails to properly defend or settle a claim brought against you by another person. Both types are actionable under California law.

Examples of Bad Faith Conduct

Insurance bad faith takes many forms. Unreasonable delays in investigating or processing claims, denial of claims without adequate investigation or explanation, lowball settlement offers that ignore the true cost of damages, misrepresentation of policy language or coverage, failure to communicate with the policyholder, threatening or intimidating policyholders, and refusing to pay undisputed portions of a claim while disputing other portions. California Insurance Code Section 790.03(h) specifically enumerates unfair claims settlement practices, and insurers who engage in them face significant liability.

Remedies Under California Law

California provides robust remedies for insurance bad faith. Policyholders can recover the full policy benefits that were wrongfully withheld, consequential damages caused by the bad faith conduct, emotional distress, and punitive damages under Civil Code Section 3294. The availability of punitive damages is what makes bad faith claims so powerful—and so feared by insurance companies. Juries that find egregious bad faith conduct have awarded punitive damages that far exceed the original policy value, sending a message that insurance companies cannot profit from mistreating their customers.

If your insurance company is treating your claim unfairly, do not assume that you have no recourse. Beverly Wilshire Law APC can evaluate your insurer’s conduct and pursue the full range of remedies California law provides. Call (310) 424-5566 or email info@bevwilshire.com for a consultation—we’re here to guide you in the right direction.