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Legal and Contractual Duties of Insurers

Dedicated California Insurance Law Attorneys Protecting Your Rights to Fair Treatment and Getting the Benefits You Deserve

Insurance companies owe legal duties to their policyholders to act in good faith when dealing with their insureds, including processing their claims and paying benefits. These responsibilities are embedded in California and federal laws, implied in every insurance contract, and even written expressly into the insurance contract itself.

Learn more below about the responsibilities of insurance companies to their insureds. If you are a policyholder in California whose health, life or disability insurance policyholder in California whose claim for benefits has been denied, or if you have otherwise been treated unfairly by your insurer, contact Gianelli & Morris in Los Angeles for a free consultation with an experienced and dedicated California insurance law attorney.

Insurance Policies Are Enforceable Contracts Governed by Law

When purchasing insurance policies, policyholders enter into a contractual agreement with the insurer. As part of this agreement, insurance companies have legal and ethical duties to act in good faith to their policyholders. This means that they are obligated to act honestly, fairly, and in the best interests of the insured. Unfortunately, some policyholders in California may find themselves facing wrongful claim denials or unfair treatment by their insurers. Understanding the legal and contractual duties of insurers can empower policyholders to protect their rights in the face of adversity.

The Good Faith Duty of Insurers

California law imposes a duty of good faith and fair dealing on insurers. This duty requires insurers to act in a fair, honest, and reasonable manner when handling claims. Insurers must not intentionally or unreasonably delay or deny valid claims. Unfair claim practices are not only unethical but also illegal under California’s Insurance Code.

Examples of bad faith practices by insurers include:

  • Unreasonable Denial of Claims: When an insurer denies a claim without a reasonable basis or justification, it can be deemed bad faith.
  • Delaying Claim Processing: Unreasonably prolonging the claims process without valid reasons is considered acting in bad faith.
  • Inadequate Investigation: Failing to conduct a proper investigation into the facts of the claim before making a decision can be deemed as acting in bad faith.

Remedies for Policyholders

When insurance companies breach their good faith duties, policyholders have the right to seek remedies for their damages. Depending on the circumstances, possible remedies may include:

  • Insurance Bad Faith Lawsuits: Policyholders can file lawsuits against their insurers for acting in bad faith. If successful, they may be awarded compensation for the claim amount, emotional distress, and, in some cases, punitive damages.
  • Regulatory Complaints: Policyholders can file complaints with the California Department of Insurance if they believe their insurer has treated them unfairly. The department may investigate the matter and take appropriate action.
  • Contractual Enforcement: Policyholders can also enforce their insurance contract through legal action, forcing the insurer to fulfill its contractual obligations.

Protecting Your Rights as a Policyholder in California

As a policyholder in California, understanding the legal and contractual duties of insurers is essential for protecting your rights when dealing with insurance claims. Insurance companies have a duty of good faith and fair dealing in handling your claims. If you believe your insurance company has wrongfully denied your claim or acted unfairly, it’s crucial to seek legal counsel from experienced insurance law attorneys. Remember that you have rights, and holding insurance companies accountable for their actions is crucial for maintaining a fair and just insurance system for all policyholders. In Los Angeles or statewide, call Gianelli & Morris at 213-489-1600 for a no-cost evaluation of your case.

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