First, it is important to understand when and how your first party insurance claim is being mishandled, or unfairly adjusted, by the insurance company.
There are California Regulations (including the Fair Claims Settlement Practices Regulations at Title 10, Chapter 5, subchapter 7.5), statutes (including Insurance Code section 790.03(h)), and case law that provide guidelines and minimum standards insurance companies must comply with in the handling of insurance claims.
If you would like a copy of the Regulations or portions of the Insurance Code, contact our office and we will be happy to send you a copy for free. Contact us at gkk@vklawyers.com or (213) 842-8164.
An overview of those guidelines and minimum standards is discussed at our December 1, 2010 Insurance Bad Faith Blog. Be aware of these guidelines and standards!
This Blog discusses some of the most important ways insurance companies fail or refuse to properly handle and adjust your first party claim, and what you should do if you believe or suspect that your insurance company is not adhering to applicable guidelines and standards in the handling of your claim.
This includes if the carrier is:
- Delaying the proper handling of your claim
- Undervaluing your losses/claim
- Improperly denying your claim
In a three-part Blog series, we will discuss what you should do if you suspect your insurance company is: (1) delaying the proper handling of your claim; (2) improperly underestimating your loss or the true value of your claim; and/or (3) improperly denying coverage for your claim – either by an outright denial, or by refusing to handle and adjust your valid covered claim.
WHAT IS IMPROPER INSURANCE COMPANY DELAY
When we buy insurance, we are buying promises. That’s it. Unlike when we buy a car or a home, for example, we receive nothing in return for our hard earned money but the insurance company’s promises (and the policy – but it is not the paper the policy is printed on we are seeking to purchase!).
One of the promises we are purchasing is the insurance company’s pledge that it will promptly pay our valid insurance claims.
As Judge McDaniel stated in the case of Austero v. National Cas. Co. of Detroit, Michigan (1978) 84 Cal.App.3d 1, in a first party case, an insurer’s wrongful denial of coverage has particular far reaching consequences:
“As correctly reflected by the jury instruction quoted, it is now firmly established that every policy of insurance imports an implied covenant of good faith and fair dealing which enjoins upon each party to the agreement a duty that neither shall do anything which impairs the right of the other to receive the benefit of agreement. (Liberty Mut. Ins. Co. v. Altfillisch Constr. Co., 70 Cal.App. 3d 789, 797.). . .
“In the usual first party case the promise of the insurer to pay money, due under the policy, to the insured upon the happening of the event, the risk of which has been insured against. The benefit contracted for by the insured is the availability of money promptly upon the happening of the event insured against, and when an insurer refuses unreasonably to make a payment of the benefits due under the terms of the policy, it deprives the insured of the essential benefit of the agreement.
“This follows, for the insured bargained for prompt payment, not a right of action against the insurer.” (Emphasis in original and added.)
Note: Austero was overruled in Egan v. Mut. of Omaha Ins. Co. (1979) 24 Cal.3d 809 on the issue of compensatory damages under California Civil Code section 3333 – the Court in Egan held that the jury could include in the compensatory damage award future policy benefits the policyholder would have been entitled to receive had the contract been honored by the insurer.
In an attempt to ensure that insurance companies honor their promise that they will promptly handle your claim, the California Regulations, section 2695.7(b), mandates that insurance companies:
“[S]hall immediately, but in no event more than forty (40) calendar days [after receiving proof of claim] accept or deny the claim, in whole or in part. . . .
Most insureds do not realize that insurance companies must accept or deny their claim within 40 days from the date of proof of loss. Note: This Regulation applies to policies, including homeowner and auto policies, issued in this state. The Regulations do not apply to workers’ compensation policies, certain health care provider liability policies, some disability income insurance, etc. Give us a call if you are not sure whether your policy is subject to the California Fair Claims Practices Settlement Regulations.
If the insurance company requires additional time (i.e., more than 40 calendar days) to determine whether a claim should be accepted and/or denied in whole or in part, the insurance company:
“[S]hall provide the claimant. . . with written notice of the need for additional time. This written notice shall specify any additional information the insurer requires in order to make a determination and state any continuing reasons for the insurer’s inability to make a determination. Thereafter, the written notice shall be provided every thirty (30) calendar days until a determination is made. . . .”
Did you also know that when an insurance company (its adjuster) receives any communication from an insured regarding a claim that reasonably suggests that the insured expects a response, the insurance company must immediately, but in no event more than 15 calendar days provide a complete response to the insured.
Section 2695.5(b) of the Regulations states:
“Upon receiving any communication from a claimant, regarding a claim, that reasonably suggests that a response is expected, every licensee shall immediately, but in no event more than fifteen (15) calendar days after receipt of that communication, furnish the claimant with a complete response based on the facts as then known by the licensee. . . .”
If your insurance company improperly fails or refuses to pay your valid, covered claim within at least 40 days from the date you have reasonably substantiated the value of your loss, your insurance company may be engaging in insurance breach and bad faith.
If your insurance company improperly fails or refuses to explain to you: (a) why it has not yet paid your valid, covered claim; or (b) what additional information your insurance company requires, it may be engaging in insurance breach and bad faith.
If you have called or written to your insurance company seeking information and a response regarding your claim, and your insurance company improperly fails or refuses to respond immediately or at least no more than 15 days after your call or letter, it may be engaging in insurance breach and bad faith.
Most importantly, if there are improper delays in the handling, adjustment, and payment of your valid and proper claim, you and your loved ones are most likely suffering.
You are not being provided with one of the very most important promises your insurance company made to you when you paid your policy premiums: “the availability of money promptly upon the happening of the event insured against. . . .“
WHAT SHOULD YOU DO IF YOUR
INSURANCE COMPANY HAS IMPROPERLY DELAYED,
CAUSING YOU SUFFERING AND CONCERN
One thing you should not do is tolerate unreasonable, improper insurance company delay.
Write to your adjuster, or your insurance company, and tell them that they are engaging in delay that is harming you, any other insureds under the policy, and family members affected by the improper delay. Your letter does not have to be fancy or complicated; you can even hand write the letter. Just make sure you have a copy of the letter you send.
You can e-mail your adjuster, or other involved insurance company personnel. Print out your e-mail, and keep a record that you sent the electronic communication.
If you speak with your adjuster or other insurance company personnel in person or over the telephone, always write down whom you spoke with, the date, time, and what was discussed. Follow that oral communication up with a letter, or an e-mail.
If you are experiencing claim handling problems, such as improper delays, get the name of your adjuster’s supervisor or claim manager. Write or e-mail the supervisor, and let that person know of the problems you are having.
Another thing you should not do is give up! In some circumstances, this is exactly what the insurance company is trying to achieve – particularly in these difficult economic times, many insureds are simply giving up and giving in.
Do not give up and give in to abusive insurance company tactics. You have recourse; there is help.
Many people do not realize that they can hire a lawyer on a contingency basis. If you have a valid, covered claim, and the insurance company is unreasonably handling your claim (including by improper delay), we may be able to help! We take our cases on a contingency basis – which means that we front the costs, and we do not recover unless we are able to prevail. We do notcharge by the hour.
This leads us to comment about so-called “frivolous lawsuits.”
Most lawyers who take contingency fee cases do not take “frivolous lawsuits.”
Contingency lawyers take cases they believe are valid and have merit. This is because we actually invest our own funds, time, and effort in contingency cases.
So, if you believe or suspect that your insurance company is improperly or unreasonably handling your valid, covered claim, don’t give up, and don’t give in. Contact us at gkk@vklawyers.com, or give us a call at (213) 842-8164.
