A lawyer consultation with a California lawyer regarding California insurance law would help a person understand if their dispute with an insurance company gives them grounds to sue the company. Assuming a person has grounds for a lawsuit, they have every right to sue their insurance company in California.
As an insurance policyholder, an individual or a business has a right to complete and clear information about their policy and the coverage it provides. Coverage, conditions, limitations on coverage, and exclusions would be the type of information that an insurance company must provide to its policyholders.
It is the insurer’s responsibility to inform you about all terms and changes clearly and in a timely manner. If these terms are breached, such as in cases of misrepresentation or non-disclosure of important facts, you possess the right to take legal action.
Once a claim is filed, insurance companies have an obligation to respond to the claim promptly and process the claim in an efficient and reasonable manner. In California, insurers are legally required to acknowledge claims within fifteen days of receiving them. If a company delays in responding without a good excuse, they have offended their insured’s right to prompt response.
Delays that happen without excuse or justification violate the rights of the insured person or business. This extends to the settlement of the claim, and any unfair practices could give grounds to sue the insurance company for insurance bad faith.
When a party enters into a contract, including an insurance contract, the contract includes an implied covenant of good faith and fair dealing. This means that the parties are contractually obligated to act in good faith and to deal fairly with each other in fulfilling the terms of the agreement. If either party fails to act as required, they may be liable for breach of this covenant of good faith and fair dealing.
In the insurance industry, this is referred to as “insurance bad faith.” Failure to pay a valid claim that is covered is also sometimes referred to as “wrongful repudiation.”
To avoid insurance bad faith, an insurance company must do the following in the case of liability insurance:
- Properly investigate a claim
- Defend a policyholder who has liability insurance that covers the claims made against them
- Pay any settlement costs or court-ordered damages when a claim is made that is covered by a policyholder’s liability insurance
- If a reasonable settlement is offered, the insurance company must accept it if it would protect their insured from out-of-pocket losses that could result from a lawsuit.
- Pay a valid claim promptly and in full.
These would be good faith obligations for liability insurance. There are comparable obligations for health insurance. A health insurance company’s failure to meet its policy obligations under a policy of health insurance could justify an insured in suing a health insurance company.
The same holds true for a car insurance company. Again, a California car insurance company must investigate California accident claims. A failure to meet its obligation of good faith and fair dealing by paying claims for losses that are covered and providing the car repair coverage in California that is promised by its policy can lead to a lawsuit against a car insurance company filed by an insured party.
How Do I File a Complaint Against an Insurance Company in California?
An individual with a claim against an insurance company may file a complaint in a civil court in California. They would have to estimate the amount of damages they think they should recover.
A person may sue an insurance company in a California small claims court. They may seek up to $12,500 or less in damages. A business can sue for a maximum of $6,250 in damages in a California small claims court.
A party who sues in small claims basically agrees to waive any amount over the maximum amount they can sue for, even if their claim is worth more in damages. For example, if the insurance company owes a person $15,000 by their calculation and the person decides to sue in small claims, they waive $2,500 in damages. They may recover no more than $12,500.
The main advantages of suing in a small claims court are as follows:
- Lower Fees: The fee for filing a complaint is less in small claims courts than in other courts.
- Faster Process: A case can come to its conclusion more quickly because a hearing often happens within 30 to 70 days after the complaint is filed.
- No Attorney’s Fees: An individual may represent themselves and does not have to pay attorney’s fees.
What Are Some Common Legal Issues With Insurance Companies?
Here are some examples of common issues that insureds have with insurance companies:
- Failure to Pay a Covered Claim: An insurance company is legally obligated to pay a claim that is covered under the plain language of the policy. It should pay the claim promptly and without causing hardship to the insured. An insured can sue the company if it fails to pay a claim that is covered promptly and without causing the insured grief.
- Failure to Pay in Full: An insurance company must pay as much as it is obligated to pay per the policy limits as justified by the facts. For example, if a person has an estimate from a reputable mechanic after a car accident of $3,000 to repair their car in full, the insurance company needs to pay $3,000. If they insist on offering less, the insured may have a case for bath faith.
- Failure to Communicate about a Claim: An insurance company has a legal obligation to communicate with an insured about their claims. Ignoring an insured who communicates about a claim is a failure to do what is required.
Like other types of insurance, health insurance is supposed to cover the legitimate cost of treatment for illnesses and injuries that the insured suffers. An insured may have paid insurance premiums for months or years before requesting coverage for their medical treatment or covered preventive care. Nonetheless, insurers sometimes do everything possible not to pay expensive covered claims.
In some cases, insurers may even cancel a customer’s policy rather than pay a covered claim. Wrongful cancellation of an insurance policy is a violation of California law, and health insurance companies can face consequences for this illegal move.
How Long Does It Take To Sue an Insurance Company?
It is not possible to say how long it would take to sue an insurance company without knowing about the specifics of the particular case. The time would depend on the facts of a party’s individual case and how it plays out. If an individual has an especially strong case, an insurance company may settle it soon after a complaint is filed or even before the insured has to file a complaint in court.
If a party’s case is less clear-cut, there may have to be a full jury trial. The parties may have to wait until the court in which they have filed their case can accommodate a jury trial. This may take several years.
When a person first consults with their attorney about their case, they can ask them to estimate how long it may take to bring their case to a conclusion.
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How Much Does It Cost To Sue an Insurance Company?
It is not possible to say how much it would cost to sue an insurance company. As noted above a person can prosecute a case more economically in a small claims court, but the value of damages they can recover is limited.
If an individual has suffered a significant loss because an insurance company has engaged in bad faith, they probably want a lawyer consultation with a California lawyer. They would probably be well-advised to be represented by a lawyer in their lawsuit. This means paying attorney’s fees. A lawyer might charge a contingency fee, which would mean that the lawyer does not get paid unless they win the case.
There would be other costs as well that might amount to a few thousand dollars. When an individual consults with a lawyer about representing them, they would want to ask them about how much it would cost to prosecute the case.
What Are Some Remedies Available in an Insurance Claim Lawsuit?
The kind of damages that a person could recover In a lawsuit against a realtor would be the following:
- Compensatory Damages: This is an amount of money that compensates the victim for the actual economic and non-economic losses they suffered as a direct result of the insurance company’s actions.
- Punitive Damages: Punitive damages are awarded rarely in cases in which the insurance company did something especially egregious and blame-worthy. The goal of punitive damages, as the term suggests, is to punish the defendant and not to compensate the victim for some provable harm.
- Attorney’s Fees and Costs: If the law that applies to a case provides for it, a victim may be able to recover their legal fees and other costs. Or the parties to an insurance contract may include a provision that allows a party who wins a suit for breach of contract to recover attorney’s fees.
A person would want to discuss their specific situation with their attorney to determine what types of damages might be available in their case and in what amount.
How Can I Improve My Chances of Winning a Lawsuit Against My Insurance Company?
A person who believes that they have grounds to prosecute a lawsuit against an insurance company definitely wants to prepare fully.
They should begin by keeping a detailed diary of their dealings with their insurance company, including all phone calls and communication in writing, e.g., text messages, letters, and emails. A person wants to note the dates of all communication and the names and locations of the people with whom they communicate.
They also want to carefully document the nature of their claim and make sure that it is the type of claim that is clearly covered by their insurance policy.
Do I Need a Lawyer To Sue an Insurance Company?
If you have been unable to get the coverage you are entitled to by your insurance policy, you want to talk to a California insurance attorney. LegalMatch.com can quickly connect you to a lawyer who will review the claim you made and your insurance policy. Your lawyer can also review the dealings you have had with your insurance company and tell you if you have grounds for a claim for bad faith.
