Identifying a Bad Faith Insurer

In the state of California, insurance companies are obligated by law to deal fairly and honestly with their policyholders. This obligation is known as the duty of good faith and fair dealing. Unfortunately, not all insurance companies live up to this standard. Identifying a bad faith insurer can spur you to take action to protect your rights and get the benefits you need and deserve without falling victim to bad faith insurance practices that result in the denial of your claim and critical medical procedures. Read on to discover some common red flags that indicate your insurer is not dealing with you fairly. For help with an unreasonable claim denial or other bad faith insurance practice in California, contact Gianelli & Morris for a free consultation with a leading team of experienced and successful California bad faith insurance lawyers.

Delayed Response or No Response

One of the initial signs of a bad faith insurer is a lack of prompt communication. California law mandates that insurers must acknowledge the receipt of a claim within 15 days, and they must decide to accept or deny your claim within 40 days. If your insurer fails to respond to your claim in a timely manner, it may indicate bad faith practices. Note that different timelines can apply depending on whether your insurance policy is governed by ERISA rules or not. ERISA generally covers employer-sponsored group plans but not private insurance you purchase on your own.

Unexplained Denial of Claims

An insurer acting in good faith should provide a clear and specific reason for any claim denial. If your insurer denies your claim without adequate explanation or based on ambiguous policy language, this is a significant red flag. Be aware that insurers often cite specific policy provisions to justify a claim denial, but if the insurer denied your claim under a blanket provision without giving your claim an independent evaluation, they haven’t satisfied their duty of good faith and fair dealing. You’ll likely need an attorney to investigate and evaluate a claim denial to determine whether a good faith coverage dispute exists or whether the insurer acted in bad faith.

Request for Excessive Documentation

While it’s standard for insurers to request documentation to process a claim, some insurers go to great lengths to make the process cumbersome. They may ask for unnecessary paperwork or information irrelevant to the claim, effectively slowing down the process and frustrating the policyholder. If you find yourself getting repeated requests for essentially the same information, the insurer might be trying to “wait you out” rather than collect the documentation they need to make a determination on your claim.

Lack of a Fair Investigation

An insurer has the obligation to conduct a thorough and unbiased investigation of any claim. Failing to do so is a direct violation of their duty toward the policyholder. Be wary of insurers who rush the investigation or ignore essential evidence that could validate your claim. Several recent news reports have uncovered situations where insurance company employees in charge of approving or denying claims rubber stamp thousands of denials at a time without reviewing them or use artificial intelligence (AI) algorithms to deny claims without personally looking at them. Needless to say, that’s not the way claims should be processed.

Rescission or Cancellation

Insurers have a right to rescind or cancel a policy, but only under limited circumstances and within limited timeframes. If an insurance company is canceling your policy to get out of paying a claim, this improper motive can lay the grounds for a bad faith claim against them, which can net you not only your insurance benefits but also additional monetary damages for the harm you’ve suffered by their actions, plus sometimes punitive damages to make an example out of them or punish them for their bad faith conduct.

Contact Gianelli & Morris to Protect Your Rights to Good Faith Insurance in California

If you experience any of these red flags, it’s crucial to take immediate action to protect your rights. Documentation is key: keep a record of all interactions with your insurance company, including emails, letters, and phone calls. Consult with an attorney experienced in California insurance bad faith laws to evaluate your case and guide you through the legal process. In Los Angeles and statewide, call Gianelli & Morris at 213-489-1600 for a no-cost case evaluation. The law offers protections against bad faith insurers, but it’s up to you to recognize the signs and take action. Gianelli & Morris can help.