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Dawson and Rosenthal
Dawson and Rosenthal

San Diego Automobile Insurance Bad Faith

Auto insurance premiums represent a significant investment for many California residents. In exchange for payment in regular installments, automobile owners can reasonably expect compensation for damages if they are involved in an accident. Unfortunately, not all insurers take their responsibilities to reasonably pay claims seriously, favoring profit over a claimant’s best interest. This is a breach of contract called insurance bad faith.

If you believe you’ve been a victim of auto insurance bad faith, you need an attorney. Contact the attorneys at Dawson & Rosenthal, P.C. today to schedule a free initial consultation. California residents choose us for their insurance legal needs because:

  • We have a concentrated focus: Bad faith insurance law is all we do.
  • We have more than 50 years of experience in legal matters involving insurance.
  • We’re fearless in the courtroom and prepare every case as if it’s going to trial.

Defining Auto Insurance Bad Faith

An insurance company acts in bad faith when it fails to adhere to the obligations outlined in an insurance policy, or when it defies the language of the California insurance code. Insurers have a legal obligation to put the needs of a claimant before its own and to seek evidence that supports coverage, not deny it. The following may constitute examples of auto insurance bad faith dealing:

  • Refusing to pay a claim the company owes, such as when liability is clear.
  • Failing to pay a claim on time (i.e., unreasonably delaying a claim).
  • Failure to explain a claim denial.
  • Requesting an unreasonable amount of paperwork or demanding unreasonable evidence in support of your claim.
  • Failing to provide a reasonable evaluation of your claim, resulting in a lowball offer.
  • Failing to provide an appropriate defense for you against a claim, such as when you assume liability for an accident.

If an insurance company acts in bad faith when handling an auto accident claim, the insured may have a legal claim to hold that company responsible for its actions. A bad faith insurance claim will not only address reimbursement for any claim amount, but also may include accrued interest, reimbursement for attorney’s fees, and punitive damages.

Auto Insurance Bad Faith Laws in California

California law gives consumers the right to bring a bad faith claim against their insurer when it breaches its duty of good faith and fair dealing. This applies when an insurance company fails to reasonably compensate an insured for a loss that should have coverage under the policy. Each insurance company in California has an implied duty to exercise good faith when providing coverage and interpreting policy language. Under California law, auto insurance bad faith may occur when an insurer:

  • Denies a claim without a reasonable basis or explanation
  • Delays the claims process
  • Unreasonably terminates a claim or coverage
  • Underpays a claim without a reasonable basis or explanation

California Insurance Code 790.03 expressly prohibits the following actions:

  • Engaging in deceptive practices to avoid reasonably paying claims.
  • Failing to reasonably investigate claims.
  • Deliberately misrepresenting the facts of the policy to avoid providing coverage.
  • Creating unreasonable demands for proof.
  • Using coercion to settle a claim.
  • Using unreasonable conduct in litigation.
  • Failing to disclose policy limits.
  • Failing to use reasonable investigative procedures.
  • Coercing an insured to contribute monetarily to a settlement.

Who Is Liable for Auto Insurance Bad Faith?

Many types of auto insurance bad faith exist, and anyone within an insurance company may be responsible. An insurance agent, for example, may misrepresent the extent of coverage when selling the policy, or a claims adjuster may purposely draw out a claims process to delay payment. The insurance company is generally liable regardless of which employee perpetrates the bad faith. Employees are representatives of the company, so they generally will not be personally liable for insurance bad faith. Exceptions do exist, for example, when a defendant is acting in bad faith out of the scope of his or her employment with the agency.

Auto insurers have an obligation to their insured to promptly and reasonably pay valid claims. If you believe you’ve been a victim of insurance bad faith, contact the lawyers at Dawson & Rosenthal, P.C. to schedule a free review of your legal options today.