An insurance policy is supposed to provide the insured policyholder with peace of mind: the policyholder and the insurance company have a contract stating that in exchange for premium, the insurance company will pay medical bills and provide other compensation in the event of an injury to the policyholder. Insurance is the only product that a consumer purchases which she hopes she never has to use. Unfortunately, however, when a claim is ultimately made, insurance companies do not always hold up their end of the bargain. When that occurs, a policyholder should consult a lawyer for assistance.
An insurance company does not honor its insurance policy, or engages in “insurance bad faith,” when it handles its policyholders’ claims in an unreasonable way. Insurance companies in California are bound to their policyholders by law to an “implied covenant of good faith and fair dealing.” In simple language, this means the insurance company is supposed to treat policyholders fairly.
Duties to Policyholders
Insurance companies owe a number of important duties to policyholders. These duties can include the duty to investigate a claim; a duty to indemnify (pay a settlement agreement); a duty to defend the policyholder if he or she is sued; and a duty to settle a lawsuit reasonably.
An experienced insurance bad faith lawyer can advise on whether a policyholder has a cause of action against the insurance company if an insurance company fails to carry out any of these duties. For instance, insurance companies have a deadline by which they must investigate a policyholder’s claim for coverage. If the insurance company neglects to respond to a policyholder’s claim, a policyholder can take legal action. An attorney will make sure the policyholder’s claim has been properly tendered and advise on strategies to contact the insurance company, or even bring a lawsuit. A lawyer can also advise on appropriate steps for document collection prior to bringing a lawsuit. Keeping written records is critical to successfully challenging an insurance company’s bad faith action.
To discuss your situation and evaluate whether there is a viable cause of action for breach of contract as well as other legal wrongs, contact attorney Drew E. Pomerance today.