Pursuing a Homeowners Insurance Claim

There are insurance policies for almost everything. Californians know that celebrities hold insurance policies to their own body parts even. Automobile insurance is the most familiar, but there is also homeowners insurance, which is also well known. Home-buyers are sometimes required to purchase homeowners insurance before they can move in. 

Homeowners insurance covers a wide variety of different events. Fires, floods, theft, and dog bites are just a few. Both liability (coverage for negligence of the homeowner) and losses (damages that homeowners incur) are covered. There are exclusions and exceptions. Delays, denials, and confusion can be anticipated.

Every policy is different; attorneys can assist in pursuing a first party claim, particularly if the insurance company has issued a denial. A first party claim is when a policyholder pursues a claim pursuant to the policy purchased. For example, a first party claim could be made when a home is burglarized, and there is a provision that covers items stolen.

Since insurance law is based on case law, statutes, and regulations, there are a myriad of ways a policy can be interpreted. It is important, however, to know some basic principles. Here is a non-exhaustive short list:

1) Once a claim is reported, the insurance carrier must provide basic information to the policyholder -- like limits, benefits, coverages, exclusions, and other provisions in the specific policy in place.

2) An insurer must explain why a claim has been denied, and provide a basis for that decision. For example, if a claim was denied because the insurer did not have an opportunity to inspect the premises, it would have to show that a request was made and the request was denied.

3) Before an insurance carrier can ask for a "release," it must explain the legal consequences of having the claimant execute the release, i.e. forever barring the claimant from pursuing the claim further in court, or in arbitration.

4) The insurer must respond within 15 days if a claimant asks for information related to his or her claim. An insurer cannot ignore its own insured.

5) All insurance companies must investigate a claim with diligence, thoroughness, and in good faith. The insurer cannot delay a claim when there is sufficient, reasonable information to conclude the claim.

Pursuing a homeowners insurance claim can be daunting. It is important to know your rights and to be aggressive. It is extremely wise to contact an experienced attorney.

California Appellate Case Adds Bite to Bad Faith Litigation

Insurance companies are supposed to serve the interests of their insureds. By paying a premium, insureds should expect peace of mind, financial security, and a good faith investigation in the event of an accident. Unfortunately, that isn't the case all of the time.

Sometimes insurance companies act in "bad faith."Bad faith" is a legal term derived from principles of contract. Certain contracts,  like insurance, require that  parties act with "good faith and fair dealing," with one another. Specifically to insurance, insurers are mandated to fairly investigate, evaluate, and process a claim.

When an insured's insurance company fails to properly evaluate or process a claim, it could potentially lead to "bad faith" litigation against that insurance company. Recently, a California case expanded the ability for insureds to bring a bad faith litigation case against their own insurance company.

MASLO V. AMERIPRISE AUTO & HOME INSURANCE (2014)

The Plaintiff in Maslo was involved in a motor vehicle accident where it was found that the other driver was at fault. After medical treatment for a number of months, Plaintiff submitted a demand to his own insurance company for the policy limits under his UM (uninsured motorist) provision.

Ameriprise, the insurer, asked for an extension, and then commenced arbitration proceedings. In doing so, it did not make a settlement offer and refused to mediate the matter. As a result, Plaintiff had to wait an additional 2 years to receive an award, less than the policy limits.

After arbitration, Plaintiff filed a bad faith lawsuit against Ameriprise. Plaintiff alleged that Ameriprise forced Plaintiff into arbitration without investigating, evaluating, and attempting to resolve the claim. Ameriprise rebutted, as a defense, that there was a "genuine dispute" regarding payment, and that the arbitration award evidenced as much, since it was less than the policy limits. Ameriprise further stated that it was the fault of Plaintiff for overvaluing his own claim.

The trial court agreed with Ameriprise but the California Court of Appeal, 2nd Appellate District disagreed and reversed. The Appellate Court held that an arbitration award lower than the policy limit does not necessarily preclude an insured from bringing a bad faith lawsuit. It stated, in part:

"An insurer’s statutory duty to attempt to effectuate a prompt and fair settlement is not abrogated simply because the insured’s damages do not plainly exceed the policy limits. Nor is the insurer’s duty to investigate a claim excused by the arbitrator’s finding that the amount of damages was lower than the insured’s initial demand. Even where the amount of damages is lower than the policy limits, an insurer may act unreasonably by failing to pay damages that are certain and demanding arbitration on those damages."

WHAT DOES IT MEAN FOR OTHER INSUREDS?

The recent decision makes it clear that insurance companies cannot simply rely upon an award, in of itself, to clear themselves of "bad faith." Insurance companies have a duty to thoroughly investigate, evaluate, and process a claim after liability is determined, no matter if they think that they can prevail at an arbitration proceeding. This means that insurance companies will have to make a good faith attempt to settle first party claims prior to arbitration.

It is always best to have an attorney represent your interests. Our office has a lot of experience in dealing with insurance companies -- and potential "bad faith" situations. We welcome your questions, calls, and cases.

Insurance Bad Faith

Insurance Bad Faith Law Gets an Update

California has long been considered a benchmark state with regard to the development of insurance bad faith law. What California pioneers, many other states often implement. As such, updates to California’s bad faith landscape have wide reaching impact on the larger body of insurance bad faith law. For consumers and attorneys alike, maintaining at least a basic understanding of the state of the law in California can have significant benefits.

What is bad faith?

For the layperson, bad faith law essentially makes insurance companies liable if they treat their clients unfairly. What exactly constitutes unfair treatment is complex, and currently under some flux, but the summation is as follows; implied in every contract is a commitment to treat the other parties fairly as the contract unfolds. Known as the implied covenant of good faith and fair dealing, this provision ,imposed on every contract by operation of law, requires parties to act in good faith as they carry out their duties under the agreement. In playground terms: No Cheating.

In the insurance setting, the list of things that constitute “cheating” by an insurance company is fairly long. Some types of bad faith are defined in specific laws while others are simply enforced by courts based on reasonable expectations. Some of the most common mistakes an insurer might make, and thus leading to potential liability, include:

1. Withholding information from an insured, the beneficiary of a policy.


2. Refusing to settle a claim for which liability is reasonably clear, otherwise known as “gambling with a client’s money.”


3. Low-balling, or giving extremely unreasonable, settlement offers.


4. Wasting everyone’s time with baseless delays; legal or procedural.

Third-party rights

In the world of insurance litigation, a third-party is anyone who stands to collect a benefit, such as monetary payment, from an insurance contract owned by someone else. This might include hospitals which provide treatment to an injured person based on an expectation of later receiving payment out of an insurance settlement or the injured plaintiff themself in any lawsuit that may ultimately be covered by a defendant’s insurance policy. While the definition of a third-party is relatively clear, what rights those entities may have has changed somewhat over the years.

In August the California Supreme Court ruled that, while third-parties cannot sue an insurance company for bad faith unless they have some contractual relationship with that insurance company, other avenues may cover the same ground. In other words, bad faith is a legal remedy reserved for people who are actually contracted with an insurance company and is designed to help those people gain the full benefits of their arrangements. That is, the policies for which consumers pay good money for, should give a benefit in the event of an occurrence. But this understanding of bad faith law does not preclude lawsuits based on other legal theories just because the underlying facts might support both types of suits.

Other avenues

The Court’s ruling leaves open some potentially novel avenues by which third-parties, typically the plaintiffs in personal injury lawsuits, can pursue insurance companies for bad-faith like practices, even in circumstances traditionally blocked by limitations to third-party suits. In another recent decision, a California Court of Appeal further expanded these options when it allowed a third-party to sue a defendant’s insurance company for bad faith, failure to notify the injured party about a claims reporting deadline, under a med-pay clause of a policy for which primary liability had already been settled.

Plaintiff’s bottom line

While the full extent of these rulings will not be known until more cases come down the pipe dealing with these issues, recent rulings may provide injured plaintiffs with an expanded range of possible options for recovering their damages in some situations. This ultimately makes it more likely that your attorney will be able to get you the settlement to which you are entitled. Stay tuned as we continue to monitor the ongoing developments in this critical area of personal injury law.