Has your insurance claim been wrongfully denied?
Your carrier may be acting in bad faith. Our California insurance bad faith lawyers can help you get the compensation to which you’re entitled.
Virtually every American has a few different insurance policies, to protect our homes, our cars, and our businesses. We expect that our insurance companies will help us in the event of an unexpected emergency.
We assume that the (often expensive) coverage we pay for will help cover our losses. Yet, too often, that’s not what happens.
The sad truth is that insurers make more money by denying expensive claims than by fulfilling them, and policyholders are often hung out to dry by their carriers when they’re at their most vulnerable.
When this happens, it’s called insurance bad faith.
If your insurance company is giving you the runaround, we’re here to help. The attorneys at Hochfelsen & Kani have decades of experience handling bad faith litigation in Orange County and throughout Southern California. We’ve taken on the biggest insurance companies in the country, and we may be able to help you build a claim against your insurer, too.
If you have a valid bad faith claim, you may be entitled to significant damages.
Contact our Newport Beach office today to learn more about your legal options in a free, confidential case evaluation.
What Is Insurance Bad Faith?
When you take out an insurance policy, you are creating a contract between you and the insurance company. Both parties agree to uphold their ends of the deal: the policyholder will pay premiums, and the carrier will protect the insured in an unexpected event.
However, unlike other business contracts, insurance policies have one key difference: the insurance company has economic power over the policyholder.
When an insured files a claim, they are at their weakest. They may be dealing with an expensive lawsuit, property loss, or a medical emergency.
Meanwhile, the insurance carrier is financially strong. This disparity in power creates a legal duty of good faith, meaning the carrier must not take unfair advantage of that disparity. If it does, it’s engaging in bad faith conduct.
When an insurer acts in bad faith, the injured party may be able to recover significant damages, often much higher than the original claim. Bad faith litigation is intended not only to compensate insureds whose claims were wrongfully denied, but also to warn insurance companies that they must obey the law.
Examples of Bad Faith Conduct
The most obvious way an insurance company acts in bad faith is refusing to pay a policyholder’s valid claim. However, there are many other ways the company might take advantage of its insureds, including:
- Offering an unreasonably low settlement
- Failing to explain a coverage denial
- Delaying payment
- Failing to conduct a proper investigation of a claim
- Failing to defend the insurer against third-party claims
- Misrepresenting coverage
- Wrongfully cancelling a policy
- Wrongfully imposing higher premiums after filing a claim
- Generally exploiting the insured
Insurance bad faith is shockingly common. Some studies show that 85 to 95% of these companies routinely act in bad faith. If you believe your insurer is breaching its duty, you are probably right—and there are steps you can take to protect yourself.
Laws Are on the Side of the Insured
Under California’s Unfair Claims Settlement Practices Act, insurance companies are prohibited from engaging in unfair, discriminatory, or deceptive practices. You have a right to be treated with respect by your insurance company, and if you make an honest, valid claim, there is no reason your right to benefits should be denied.
Courts also err on the side of protecting policyholders. Policy provisions that explain what is covered are usually interpreted broadly. On the other hand, provisions that explain what is not covered are usually interpreted narrowly, so if something is not specifically excluded, the carrier must cover it. Any ambiguity in a policy is in favor of the insured. If you’re thinking about filing a claim, it may be helpful to know that courts are often sympathetic towards policyholders.
You are legally entitled to fair treatment and appropriate compensation when you file an insurance claim. If your carrier is acting in bad faith, you may have the grounds for a lawsuit. Contact our office today for a free consultation to discuss your claim.
What Type of Lawsuit Can I File? You can file a lawsuit against any insurance company, from the big guys like Prudential, Allstate, and State Farm, to smaller, regional companies. In some cases, you may be able to sue the insurer’s parent company or individual employees.
The two most common causes of action against insurers are breach of contract and bad faith. However, there are several other claims you may be able to make against a carrier:
- Negligent misrepresentation
- Intentional infliction of emotional distress
- Breach of fiduciary duty
- Unfair claims practice
- Unfair competition
Depending on the severity of the insurer’s actions, you may be able to file multiple claims against them. Our attorneys can help you determine what claims are available to you and choose a course of action to recover the maximum award.
Contact our Newport Beach CA office today to discuss your options.
Policyholders Can Receive Significant Damages in Bad Faith Lawsuits
If the court finds that your insurer acted in bad faith, there are a variety of ways the court may punish the insurance company and compensate you. You may be entitled to:
Contract damages: Payment of the denied claim, plus interest from the date the benefit was due
- Compensatory damages: Payment for your injuries, including emotional distress, pain and suffering, and economic harm (for example, being forced to close your business because of the insurer’s bad faith acts)
- Punitive damages: Payment to punish the insurance company
- Attorney’s fees: Payment to cover your legal expenses
Seeking these damages through a lawsuit is often worthwhile. A study of bad faith litigation showed that punitive damages are awarded in almost half of bad faith lawsuits, compared to just 4-6% in all civil litigation. When punitive damages are awarded, the average award is more than $16.5 million. If you pursue a bad faith claim, you may receive a similar award.
What to Do if You Believe Your Insurance Company Is Acting in Bad Faith
If your insurance company has denied your claim, stopped responding to you, unexpectedly cancelled your policy, or engaged in any other bad faith acts, it is important that you set yourself up for a successful lawsuit, if you choose to file one. Remember to do these four key things:
- Take action right away. The statute of limitations for bad faith claims can be as short as two years from when the bad faith action began, but that date is not always easy to pinpoint. Any delay in filing a claim could cause it to be thrown out by the court.
- Contact a bad faith insurance lawyer. Don’t try to deal with your insurance company on your own. An attorney will ensure that you take proper action to preserve your rights and file a successful claim.
- Document all interactions with the insurance company. Save emails and take notes after phone calls. Keep your notes organized so they can be easily presented as evidence if necessary.
- Ask your insurance company to provide written explanations of claim denials, policy cancellations, and other decisions they make. These explanations can be used as evidence. Plus, if your carrier refuses to provide an explanation altogether, that can be an act of bad faith in and of itself.
Even if you’re not sure whether you have a claim, it never hurts to get a professional opinion. Our attorneys offer free consultations and will help you decide if and how you should file a lawsuit. Contact us today.
How to Choose an Insurance Bad Faith Lawyer
You deserve compensation for being mistreated by your insurance company, and the best way to ensure you get maximum compensation is to work with an experienced, trustworthy lawyer. When choosing a lawyer, he or she should:
- Have a deep knowledge of insurance laws. Insurance is one of the most complex industries out there. Your attorney should know your state’s insurance statutes inside and out and be able to demonstrate that knowledge. They should be able to tell you definitively whether you have a claim and what damages are possible for you to recover.
- Be tenacious. Insurance companies have a virtually endless pot of money to pay their teams of intimidating lawyers. They will fight dirty, drag out your lawsuit, and pressure you to take low-ball settlements or drop your claim altogether. Your lawyer should be equally tenacious. Be sure they are capable of going toe-to-toe with a billion-dollar insurance company.
- Believe in you and your claim. Your lawyer should be on your side through challenges, setbacks, and defeat. When one course of action doesn’t work, they should show you other options and be willing to try again. You should feel, without a doubt, that your lawyer is your advocate.
- Have a long track record of success. Choose an attorney who not only focuses on insurance bad faith claims, but has a history of winning. You should feel confident that your lawyer has the skills to secure the best possible outcome for you, and those skills come from years of experience.
Call a Hochfelsen and Kani experienced California insurance bad faith lawyer today as there are time limits (statutes of limitation) on filing a lawsuit. We do many of these cases on a contingency fee basis, i.e. you pay no fee unless we win.