Insurance Bad Faith
When your insurer denies, delays, or underpays a valid claim
Your Insurer Owes You Good Faith
Insurance bad faith is an insurer's unreasonable failure to honor the policy it sold you. Every insurance policy issued in California carries an implied promise: the insurer will handle your claim fairly and will not put its own financial interest ahead of yours. When an insurer breaks that promise by denying a valid claim, dragging out the investigation, or offering a fraction of what is owed, California law gives the policyholder a remedy that goes beyond the policy itself.
We represent policyholders, including business owners, property owners, and injured people, whose insurers have not paid what the policy requires. We read the policy, compare it to the claim file, and hold the carrier to the standards set by the Insurance Code and the Fair Claims Settlement Practices Regulations.
Signs of Bad Faith
Denial Without Investigation
The insurer rejected the claim without inspecting the loss, interviewing witnesses, or reviewing the records you provided.
Unexplained Delay
Weeks pass without a decision, repeated requests for documents you already sent, or no written explanation of the holdup.
Lowball Offers
An offer far below the documented loss, with no explanation of how the number was reached.
Misreading the Policy
Relying on an exclusion that does not apply, or ignoring coverage that does.
Failure to Settle Within Limits
In an injury claim, refusing a reasonable demand within the policy limits and exposing the insured to a larger judgment.
Unfair Pressure
Suggesting you accept less because the process will take too long, or that hiring a lawyer will hurt your claim.
Claims We Handle
Commercial Property
Fire, water, theft, vandalism, and business interruption claims by business and property owners.
Homeowners & Residential Property
Fire, water damage, and theft claims, and disputes over the scope and cost of repairs.
Auto & Uninsured Motorist
Denied or underpaid collision, property damage, and uninsured or underinsured motorist claims.
Injury Claims and Policy Limits
Third-party claims where the insurer refuses to settle a serious injury claim within the available limits.
Disability & Life
Denied disability benefits and contested life insurance claims.
Liability Coverage Disputes
Refusals to defend or indemnify a business or individual under a liability policy.
What California Law Provides
California recognizes bad faith as a tort, not only a breach of contract. That distinction matters. A policyholder who proves bad faith may recover the benefits owed under the policy, the consequential financial losses the insurer's conduct caused, emotional distress in appropriate cases, and the attorney fees spent to obtain the benefits. Where the insurer acted with fraud, oppression, or malice, punitive damages are available.
The Department of Insurance's Fair Claims Settlement Practices Regulations set specific rules for how claims must be handled, including deadlines to acknowledge, investigate, and decide a claim, and a requirement that any denial be in writing with the reasons and the policy provisions relied on. An insurer's failure to follow those rules is evidence in a bad faith case.
If Your Claim Was Denied or Stalled
STEP 01
Get the Denial in Writing
Ask for the specific policy provisions and the facts the insurer relied on. California requires this.
STEP 02
Keep Every Record
Save the policy, the claim file, photos, estimates, invoices, and every letter, email, and call log.
STEP 03
Do Not Sign a Release
A release or final payment acceptance can end the claim. Have it reviewed first.
STEP 04
Have the Policy Reviewed
We compare the policy language and the claim file to the insurer's stated reasons, and tell you where you stand.
Common Questions
Bad faith is an insurer's unreasonable failure to honor its policy. Common examples are denying a claim without a proper investigation, delaying payment without a good reason, offering far less than the claim is worth, misstating the policy, or refusing to settle an injury claim within the policy limits when it should.
Under California's Fair Claims Settlement Practices Regulations, an insurer must acknowledge a claim within 15 calendar days (10 CCR § 2695.5(e)) and accept or deny it in writing within 40 calendar days after receiving proof of the claim (10 CCR § 2695.7(b)). If it needs more time, it must tell you why in writing and update you at least every 30 days (10 CCR § 2695.7(c)).
The policy benefits that were owed, the financial losses the denial or delay caused, emotional distress in appropriate cases, the attorney fees spent recovering the benefits, and, where the insurer acted with fraud, oppression, or malice, punitive damages.
Yes, and it can be short. Many property policies require suit within one year of the loss, and other claims carry their own deadlines. Because the clock can run while the insurer is still reviewing your claim, have the policy reviewed as soon as a claim is denied or stalls.
Page last updated September 2026. General information, not legal advice.
Related Practice Areas
Business Counsel
Ongoing counsel for companies and their owners: contracts, leases, governance, and risk.
Business Transactions
Forming companies, ownership agreements, buying and selling businesses, and commercial real estate.
Personal Injury
Accidents and injuries of every kind, including wrongful death.
Was Your Claim Denied?
Send us the policy and the denial letter. We will tell you whether the insurer followed the rules and what your options are.
Request a Claim Review