Legal Remedies Available for Bad Faith Insurance Practices
When an insurance company fails to handle your claim honestly and fairly, you have the right to hold them accountable under California law. That accountability means more than just getting the insurance benefits you are entitled to. In many cases, you can recover compensation for the many ways an insurer’s bad faith conduct has harmed you. Additional money damages may be appropriate to punish an insurance company’s harmful or outrageous conduct and set an example for others.
Below, we explain the full range of legal remedies you may pursue if your insurer has acted in bad faith. To discuss a situation you may have with an unfair claim denial, contact Gianelli & Morris in Los Angeles to speak with an experienced and dedicated California insurance bad faith lawyer.
What Is Insurance Bad Faith?
Insurance bad faith happens when an insurance company unreasonably refuses to fulfill its legal and contractual obligations to its policyholder. This can include denying a valid claim without a reasonable basis, failing to investigate a claim properly, delaying payment unnecessarily, or offering far less than what is owed. Under California law, every insurance contract includes an implied promise that the insurer will act in good faith and deal fairly with its insured. When an insurer violates this duty, the policyholder can sue for bad faith and seek damages far beyond the original claim amount.
Now let’s take a look at the different categories of legal remedies that may be available to you if you become the victim of insurance bad faith.
Contractual Damages: Enforcing the Policy Promise
Contractual damages are the foundation of any bad faith claim. This means the insurer must pay the full amount of benefits originally promised under the policy. Whether your claim involves health insurance, life insurance, or disability coverage, the insurer is required to pay what you were owed from the start.
Consequential Damages: Recovering Your Full Losses
Bad faith often causes financial harm that goes far beyond unpaid benefits. For example, you may face unpaid medical bills that go to collections, incur credit damage, or need to pay out of pocket for care you should not have had to pay for. You might also lose income if a treatment delay keeps you from working. California courts allow policyholders to recover these extra-contractual losses so they can be made whole.
One key category of consequential damages is emotional distress. When an insurer’s actions cause stress, anxiety, or worsen an illness, the law recognizes this harm and allows recovery for mental anguish.
Punitive Damages: Punishing Egregious Conduct
Punitive damages are often available in bad faith cases to punish an insurer’s extreme misconduct and deter future wrongdoing. To win punitive damages in California, you must show the insurer acted with oppression, fraud, or malice, such as deliberately ignoring evidence, lying about coverage, or training adjusters to deny valid claims. An intentional misrepresentation, concealing a material fact, or acting in a way that shows a willful and conscious disregard for the policyholder or a conscious disregard of their rights would all fit the criteria for punitive damages under California law.
There is no fixed cap for punitive damages in California, but they must be proportional to the harm done and significant enough to send a clear message.
Other Remedies and Legal Costs
Another protection for policyholders is the ability to recover legal fees. Taking on an insurer can be costly. California law may allow you to recover the money spent on attorneys so you can pursue justice without risking financial ruin. Gianelli & Morris takes insurance bad faith cases on a contingency fee basis. We advance all costs of litigation and only accept a fee if we are successful on your behalf.
How Bad Faith Happens
Bad faith can take many forms. Insurers may fail to investigate a claim properly, cherry-pick evidence to justify a denial, misrepresent policy terms, or create unreasonable delays to wear claimants down. Any of these tactics, among others, can open the door to a bad-faith lawsuit.
Steps to Take if You Suspect Bad Faith
If you suspect bad faith, document everything. Keep copies of letters, emails, and phone call logs. Ask the insurer to explain the reasons for denial in writing. If you receive vague answers or conflicting explanations, this may be a red flag.
Then, consult an attorney experienced in bad faith insurance law. A lawyer can help you understand your rights, preserve your claim, and negotiate from a position of strength.
Standing Up for Your Rights in California Insurance Law
At Gianelli & Morris, we have decades of experience representing policyholders whose insurers failed them when they needed help the most. We hold insurance companies accountable so you can recover the full extent of compensation you are owed under the law.
If your valid claim was denied, delayed, or underpaid, don’t accept it as final. Contact us today to discuss your options and protect your rights under California’s strong bad faith laws.
