Know Your Rights: What Constitutes Insurance Bad Faith in California?
By James Johnson, Esq. Johnson Attorneys Group
In California, insurance companies have a legal obligation to act in good faith when handling claims. This means they must treat policyholders fairly, investigate claims promptly, and pay out valid claims without unreasonable delays. Unfortunately, some insurers act in bad faith, putting profits before people and leaving policyholders to fight for the benefits they’re rightfully owed.
What Is Insurance Bad Faith?
Bad faith occurs when an insurance company fails to uphold its duty to act honestly and fairly with its policyholder. This can apply to all types of insurance, including auto, homeowners, health, and life insurance.
Common Examples of Bad Faith Insurance Practices:
- Unjustified denial of a valid claim
- Delaying payment without a valid reason
- Failing to conduct a proper or timely investigation
- Offering far less than a claim is worth
- Misrepresenting policy terms or coverage
- Failing to provide a reason for denying a claim
For example, if you’re injured in a car accident and your insurer refuses to pay your medical bills or delays the process for months without cause, that may be considered bad faith. Similarly, if your home suffers damage and your insurer lowballs the repair costs or denies coverage based on vague language, they may be acting unlawfully.
Consequences and Legal Action
Under California law, policyholders have the right to file a lawsuit against an insurer for acting in bad faith. If successful, the insurer may be held liable for:
- The full value of the original claim
- Emotional distress damages
- Attorneys’ fees
- In some cases, punitive damages for especially egregious conduct
At Johnson Attorneys Group, we fight to hold insurance companies accountable. If you believe your insurer is acting in bad faith, don’t go it alone—let us review your case and help you get the justice you deserve.
📞 Call us today at 1-800-208-3538 for a free consultation.
We don’t get paid unless you do.
Read more about laws regulating the insurance industry.
