How To Prove A California Insurance Bad Faith Claim

In California, a claim of Insurance Bad Faith is defined as:
Bad faith insurance refers to an insurer’s attempt to renege on its obligations to its clients, either through refusal to pay a policyholder’s legitimate claim or investigate and process a policyholder’s claim within a reasonable period.
It simply means:
A party can sue an insurance company that refuses to pay a legitimate claim or handle a claim in a timely manner.
There are 6 elements of the claim:
- Element 1. The plaintiff suffered a loss covered under an insurance policy with the defendant. The plaintiff experienced a financial loss that should have been paid for by their insurance policy with the defendant, meaning the insurance company failed to fulfill its obligation to cover the claim.
Facts that might support this element look like:
* The plaintiff experienced significant property damage due to a covered event, such as a fire, which is explicitly included in the insurance policy.
* The plaintiff submitted a claim to the defendant for the damages incurred, providing all necessary documentation as required by the policy.
* The defendant acknowledged receipt of the claim and confirmed that the damages were within the scope of coverage outlined in the insurance policy.
* The plaintiff incurred additional expenses related to temporary housing while repairs were being made, which are also covered under the policy.
* The defendant delayed processing the claim for an unreasonable period, causing further financial strain on the plaintiff. - Element 2. The defendant denied coverage or refused to pay plaintiff’s loss. In an insurance bad faith claim, this element means that the insurance company did not honor its promise to cover the plaintiff’s loss, either by denying the claim or refusing to pay for the damages, despite having a valid obligation to do so.
Facts that might support this element look like:
* The defendant issued a formal letter to the plaintiff stating that the claim was denied due to a purported lack of coverage under the policy.
* The defendant failed to provide a reasonable explanation for the denial of the plaintiff’s claim despite multiple requests for clarification.
* The defendant did not conduct a thorough investigation into the plaintiff’s claim before deciding to deny coverage.
* The defendant’s claims adjuster acknowledged that the loss was covered under the policy but still recommended denial to management.
* The defendant delayed payment for an unreasonable amount of time, ultimately refusing to pay the plaintiff’s valid claim. - Element 3. Under the policy, the plaintiff had a right or obligation. In an insurance bad faith claim, the plaintiff must show that they had a specific right or duty under their insurance policy, meaning the insurer was required to act in a certain way or provide certain benefits to the policyholder.
Facts that might support this element look like:
* The insurance policy explicitly states that the plaintiff is entitled to coverage for damages resulting from specific incidents, including those at issue in this claim.
* The plaintiff fulfilled all necessary conditions precedent outlined in the policy, including timely reporting of the claim and providing requested documentation.
* The insurer acknowledged the plaintiff’s right to coverage by initially processing the claim and assigning an adjuster to evaluate the damages.
* The policy includes a clause that guarantees the plaintiff’s right to a fair assessment of their claim, which the insurer failed to uphold.
* The plaintiff was informed by the insurer that their claim was valid and would be covered under the terms of the policy, creating a reasonable expectation of coverage. - Element 4. The defendant did not reasonably inform the plaintiff of their right or obligation. The defendant failed to clearly explain to the plaintiff their rights or responsibilities regarding the insurance policy, which is a key factor in proving that the insurance company acted in bad faith.
Facts that might support this element look like:
* The defendant failed to provide the plaintiff with a clear explanation of their coverage options and limitations during the policy issuance process.
* The defendant did not send any written communication outlining the plaintiff’s rights and obligations under the insurance policy after a claim was filed.
* The defendant neglected to inform the plaintiff about the specific documentation required to support their claim, leading to confusion and delays.
* The defendant’s customer service representatives provided inconsistent information regarding the claims process, leaving the plaintiff uncertain about their rights.
* The defendant did not offer any educational resources or guidance to help the plaintiff understand their policy terms and conditions. - Element 5. The plaintiff was harmed. In an insurance bad faith claim, the plaintiff must show that they suffered real harm, like financial loss or emotional distress, because the insurance company unfairly denied their claim or failed to act in good faith.
Facts that might support this element look like:
* The plaintiff incurred significant medical expenses due to injuries sustained in an accident that the insurance company refused to cover.
* The plaintiff experienced a loss of income as a result of being unable to work due to the injuries, which the insurance company denied compensation for.
* The plaintiff suffered emotional distress and anxiety from the prolonged claims process and the insurance company’s refusal to pay valid claims.
* The plaintiff’s credit score was negatively impacted due to unpaid medical bills that the insurance company should have covered.
* The plaintiff faced additional financial burdens from hiring legal counsel to pursue the claim against the insurance company. - Element 6. The defendant’s failure to reasonably inform the plaintiff was a substantial factor in causing their harm. The defendant’s failure to clearly communicate important information to the plaintiff played a significant role in causing the plaintiff’s harm, showing that the defendant acted unreasonably in handling the insurance claim.
Facts that might support this element look like:
* The defendant failed to provide the plaintiff with clear information regarding the coverage limits of their policy, leading to unexpected financial losses.
* The defendant did not communicate the necessary steps for filing a claim, resulting in delays that exacerbated the plaintiff’s damages.
* The defendant neglected to inform the plaintiff about critical exclusions in their policy, which directly contributed to the denial of their claim.
* The defendant’s lack of timely updates on the status of the claim left the plaintiff uninformed and unable to mitigate their losses.
* The defendant’s failure to explain the claims process created confusion, causing the plaintiff to miss important deadlines and suffer additional harm.
(See California Civil Jury Instructions (CACI), No. 2333.)
If you’re in court without a lawyer and plan to assert a Claim of Insurance Bad Faith, having a Personal Practice of Law at Courtroom5 is essential. You’ll need to make informed decisions about what to file at each phase of your case and prepare legal documents that are supported by thorough legal research and a strong analysis of the facts. Equip yourself with the tools and knowledge to effectively navigate your legal journey.
Prove Your CA Insurance Bad Faith Claim
U.S. Civil Cases Only