What Is a Bad Faith Insurance Lawsuit and What Are the Grounds
Insurance policies are agreements of trust and assurance. Policyholders pay premiums with the expectation that benefits will be there when they need them and their insurance company will provide the necessary coverage. Unfortunately, this trust is breached all too often, leaving policyholders in a challenging situation, unable to get an important medical procedure or keep up their mortgage payments after the death of a loved one. This is where the concept of a bad faith insurance lawsuit comes into play. Below we offer an overview of bad faith insurance claims, including the ins and outs of a lawsuit when necessary. If you are experiencing problems with your health, life, or disability insurance policy and suspect the insurance company is treating you unfairly, contact Gianelli & Morris in Los Angeles to share your concerns with an experienced and successful California insurance bad faith lawyer.
Understanding Bad Faith in Insurance Claims
“Bad faith” in the context of insurance claims refers to the insurer’s failure to fulfill its obligations to the policyholder. This breach is not just a denial of a claim based on a good faith coverage dispute; instead, it is characterized by the insurer’s unreasonable or dishonest conduct. California law recognizes the duty of good faith and fair dealing in every insurance contract, meaning insurers must act fairly and without intent to defraud or oppress the insured.
Bad faith actions by insurance companies can manifest in various ways, including:
- Unreasonable Claim Denial: When an insurer denies a valid claim without a reasonable basis.
- Delay in Handling Claims: Excessive and unjustified delays in claim processing.
- Inadequate Claim Investigation: Failing to conduct a thorough and fair investigation.
- Lowball Offers: Offering significantly less than what the claim is worth.
- Misinterpretation of Policy Language: Distorting policy language to deny or minimize a claim.
- Refusal to Settle: Unwillingness to settle a case where liability is clear.
Legal Grounds for a Bad Faith Lawsuit in California
Legally speaking, a bad faith lawsuit can be grounded in either contract or tort. A contractual claim arises when the insurer breaches the insurance contract, while a tort claim pertains to the violation of the duty of good faith and fair dealing.
Contractual Bad Faith
The policyholder can file a lawsuit for breach of contract if the insurer fails to uphold the terms of the insurance policy. This includes unjustified denial of a covered claim or failure to pay the full value of a claim. The legal remedy would include payment of benefits due under the policy and any damages that flow from the breach.
Tortious Bad Faith
A more severe allegation, tortious bad faith involves the insurer’s intentional or reckless disregard of the rights of the policyholder. Damages in such cases can include emotional distress, attorney’s fees, and even punitive damages, intended to punish the insurer for egregious conduct. Not all states recognize tort actions for bad faith insurance. Fortunately, California, with its strong commitment to consumer protection, does provide for such claims.
Potential Damages in a Bad Faith Lawsuit
Victims of bad faith insurance practices may be entitled to various forms of compensation all designed to hold the insurance company accountable for the full range of harm its bad faith conduct has caused. Types of compensation – known in the law as damages – available to redress bad faith insurance practices include:
- Contractual Damages: Payment of the original claim amount.
- Consequential Damages: Covering losses caused by the insurer’s breach.
- Emotional Distress: Compensation for mental anguish.
- Punitive Damages: In cases of particularly malicious conduct, to punish and deter future misconduct.
- Attorney’s Fees: Reimbursement of legal costs in pursuing the bad faith claim.
How Gianelli & Morris Can Help
Gianelli & Morris, a distinguished California law firm, offers robust legal representation to those battling against unfair insurance practices. The firm’s expertise in insurance law, coupled with a commitment to upholding the rights of policyholders, makes us a formidable ally in bad faith insurance lawsuits. We work diligently to ensure that our clients receive the justice and compensation they deserve.
When facing the daunting prospect of challenging a powerful insurance company, knowledge and legal expertise are critical. If you or someone you know has been the victim of bad faith insurance practices in California, Gianelli & Morris is equipped to offer the guidance and representation needed to navigate these complex legal waters.
If you need assistance with a bad faith insurance claim or have questions about your rights under California law, call Gianelli & Morris in Los Angeles at 213-489-1600 for a free consultation. Our expertise in insurance law is a valuable resource for those seeking to challenge unjust insurance practices.