Resolving Insurance Coverage Disputes In California

Written By Alla Levin
July 24, 2021
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Resolving Insurance Coverage Disputes In California

Every year a couple hundred million insurance claims get filed against insurance companies in California and around the United States, portraying several billion dollars in insured losses. From minor mishaps like car accidents to great disastrous events, processing these claims demands the know-how of many lawyers, insurance claim professionals, administrators, and specialists in diverse disciplines. 

Luckily, for the most part, insurance claims are settled with a process of adjustment without any need for legal proceedings or courts involvement. Although, the small percentage of insurance claims don’t settle in that way, resulting in thousands of lawsuits filed in federal and state courts. 

You can also use alternative dispute resolution methods like arbitration, mediation, and settlement meetings. These are good for both insurance carriers and insurance claimants to evade the costs, stall, and uncertainty of undergoing an insurance coverage dispute in court. Keep reading to find out more about resolving insurance coverage disputes under California law.

The State Regulations What Exactly Is Insurance Bad Faith

California law enforces an implicit duty of good faith and square deal on each insurance policy based on fundamental principles of righteousness.  That duty obliges insurers to act honestly and reasonably. It also forbids them from behaving or failing to behave in any way that would divest policyholders of their insurance benefits.

If your insurance company acts in bad faith, you can litigate for the benefits owed under your policy, plus psychological distress, collateral damages, attorney’s costs, prejudgment interest, and compensatory damages.  

Bad faith litigation is becoming more usual as insurance companies continue to undertake dishonest practices that abuse the rights of policyholders. A small number of attorneys in California handle bad faith lawsuits, among which most popular are Sacramento insurance bad faith attorneys that have the right know-how and experience to help you in case of a denied insurance claim.  

These insurance litigation attorneys have negotiated and prosecuted hundreds of insurance bad faith lawsuits, and they are nationally acknowledged for handling bad faith cases. These cases are tough to prove, and the insurance companies have their own legal divisions dedicated to fighting against such claims.

What Exactly Is Insurance Bad Faith?

When people sign an insurance contract and accurately pay the premiums, they expect that they will cover their losses once the insurance policy takes place. Bad faith means that the insurer or insurance company has failed to meet its end of the contract.

It’s not just a coverage dispute but a decisive attempt to overrule a claim made in good faith by the policyholder. Bad faith lawsuits include taking the insurance company to court, if necessary, to force it to act legally and agree with the California laws and the language of the issued policy.

It Is A Duty For The Insurer to Act In Good Faith

To determine insurance bad faith in first-party cases (like those involving life insurance, health insurance, disability insurance,  or accidental death insurance), the policyholder must show that the insurer’s delay in or retaining benefits under the policy was irrational or without good reason.  

An insurance company acts in bad faith once it makes underestimating offers, unduly delayed payment of policy benefits, fails to carry out a suitable investigation, or evades payment of a claim that must be covered.  

Be Cautious When Purchasing Your Insurance Policy

The universal public assumption is that if an insurance company denies a claim, the issue is over. However, independent agents can be highly influential in making initially denied claims covered.  Many courts conceive that the ultimate goal of insurance is to insure. People don’t obtain insurance not to have coverage, although buying directly based on ‘quick, simple and inexpensive that’s often the case.

In a carefully constrained, complex field, it appears only wise to be careful of InsurTech companies that rely heavily on clients that buy insurance policies without consulting with an agent or other insurance specialist. 

Every good insurance agent must assist individuals and business people in exposure to loss analysis, matching appropriate insurance coverage with recognized exposures, and advocating for the benefit of insureds in case of loss. 

Even though the worth of such claim advocacy can’t be unpretentious, probably the biggest value proposition the agent brings to the table is the capability to minimize the probability that coverage disputes will occur.

Insurance Coverage Disputes in California: Final Words

Courts, in general, interpret ensuring contracts extensively (and exclusionary clause oppressively) in favor of the insured. However, significant is that in case loss occurs, the insurance company needs to look for coverage and not a get-out clause that will offer the ability to avoid coverage. Nevertheless, immediately consult with an attorney in case of an insurance coverage dispute. 

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