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Dawson and Rosenthal
Dawson and Rosenthal

San Diego Homeowners Insurance Bad Faith

Insurance companies have an implied duty to good faith and fair dealing under state law. When a homeowners insurance carrier puts its own needs above the insured’s or unreasonably denies coverage, it may be liable for any damages that result. If you believe you have been a victim of insurance bad faith, you may be able to file a claim against the responsible parties. Contact the attorneys at Dawson & Rosenthal, P.C. today to schedule a free initial consultation with our firm. San Diego residents choose us because:

  • We exhaustively prepare for every case and are fearless in the courtroom.
  • We have over five decades of experience dealing with insurance bad faith.
  • We only take on a few cases at a time, so we give your case the undivided attention it deserves.

Defining Homeowners Insurance Bad Faith

Homeowners insurance bad faith occurs when an insurance company breaches its implied duty to good faith and fair dealing. Everyone involved in the insurance process – from the selling agent to the claims adjusters – must work in the best interest of the customer, accurately represent facts and coverage, and more. Failure to do so represents a violation of the California insurance code.

Examples of Homeowners Insurance Bad Faith

Many different types of homeowners insurance bad faith exist. Generally, an insurer fails to exercise good faith when it delays the claims process, terminates a claim or coverage without explanation, denies a claim that would otherwise be covered, or underpays a claim without a reasonable basis. When these events occur with regard to homeowners insurance, it represents a violation of an implied contract. Some common ways insurers may commit homeowners insurance bad faith include:

  • Using old or outdated price lists to evaluate a claim
  • Attempting to misrepresent the facts of a case; for example, by trying to replace hardwood floors with laminate
  • By invoking the defense of comparative negligence without evidence, i.e., by claiming that a homeowner’s willful neglect of a dwelling led to damage or loss

Homeowners Insurance Bad Faith Laws in California

The California insurance code sets forth certain laws regarding good faith and fair dealing. Under these laws, insurance companies may not:

  • Use deceptive practices to avoid paying a valid claim.
  • Coerce a customer into settling a claim.
  • Establishing unreasonable demands for proof.
  • Failing to disclose the limits of a policy.
  • Purposely and willfully delaying a claim.
  • Failing to conduct a thorough investigation.
  • Misrepresenting the terms of a policy or coverage to deny a claim or sell a policy.

Insurance companies must adhere to certain requirements, such as:

  • Disclosing all benefits and time limits that might affect a claim.
  • Informing a claimant of any additional amount that might be payable under a policy with additional evidence.
  • The insurer must pay for the loss for the amount negotiated upon, and it cannot contain language releasing anyone from liability.
  • Once an insurer receives a claim, it must acknowledge receipt and provide additional, reasonable instructions within 15 days.

Who Is Liable for Homeowners Insurance Bad Faith?

Insurance companies are complex entities, and many individuals may be involved in the investigation and evaluation of a given homeowners insurance claim. As such, the insurance company or agency as a whole may be liable for any instances of bad faith. Certain exceptions to this rule exist, such as when an agent or employee operates outside the scope of his or her employment when committing bad faith.

Homeowners insurance policies serve to protect one of your most valuable assets. If you believe your insurance company is failing to fulfill its obligations, you may have grounds for legal action. Contact the attorneys at Dawson & Rosenthal, P.C. today to discuss your legal options in a free case evaluation.