We all pay a substantial amount for insurance. If you become disabled, or if a loved one dies accidentally or otherwise, you expect your insurance company to approve your disability claim or accidental death/life insurance claim quickly.

The policy you hold is a promise from your insurer to be there with the coverage its policy promises when coverage is needed. When you pay for a policy, the company is legally obligated to provide the coverage as it is stated in the policy terms. It is also obligated to handle your claim in a reasonable manner and resolve in good faith any claim you make.

If your insurer does not act in good faith, do not allow it to take advantage of you or to continue to act in bad faith when it handles your claim. By law, insurers cannot avoid their obligation to make a payout on a covered claim or to offer a reasonable and legitimate reason for denying the claim.

How Is Bad Faith Defined?

If your insurance company does not take its legal obligations to you seriously by not handling your claim in a reasonable manner, you may have sufficient grounds for a lawsuit alleging insurance bad faith. A simple denial of your claim is not enough. A bad faith lawsuit must be based on an insurance company’s specific acts or failures.

In California, as in most states, insurers have an obligation to handle all claims reasonably and to pay all legitimate claims. But in practical terms, what does this mean? Below are listed some – but not all – of the reasons why an insurance company may be targeted with a lawsuit that claims bad faith:

1.  Failure to investigate or negotiate your claim in good faith;
2.  Failure to share with you important information;
3.  Failure to provide an explanation for a claim’s denial;
4.  Failure to offer a reasonable settlement in a case where the liability is reasonably clear;
5.  Failure to act on a claim within a reasonable time-frame;
6.  Offering a settlement amount that is less than the value of your claim;
7.  Hiring biased experts to review claims;
8.  Failure to conduct an adequate investigation before denying a claim.

Bad faith insurance practices include prolonging a claim investigation needlessly, coercing or intimidating you into taking an insufficient payout amount, or rejecting your claim for a fabricated or disingenuous reason.

Will a Letter to the Insurance Company Help?

Sending the insurance company a letter – or asking your attorney to send a letter – might be enough to generate some action from the company. When an insurance company knows that you have taken the matter to an attorney, the company is much more likely to begin treating you right.

The potential for legal action may compel an insurance company to make a settlement offer that is reasonable, because if you prevail in court with a bad faith claim, the company may have to pay your attorney’s fees and additional damages over and above the original claim amount. In other words, you will have some leverage with an experienced disability, life or accidental death insurance bad faith attorney involved. As can be seen by our success stories, we have had many successes in taking on insurance companies after we have been hired.

How Can You Help Your Bad Faith Case?

If your case goes to court, you and your insurance attorney will have to offer specific instances of an insurance company’s bad faith. You can help your case by making copies of the pertinent insurance documents and copies of any letters or emails to or from the insurance company.

Also, be sure to maintain a record of any conversations with the company. Take notes that include the time, date, and the name and job title of the individual who spoke with you.

If your case goes to court, you and your insurance attorney will have to prove that by denying your claim, the insurance company was not merely making an honest mistake but was acting unreasonably in making its decision. If you can show that the insurer acted with fraud, oppression or malice, punitive damages may be available.

How Will Your Attorney Prove Your Bad Faith Claim?

A California bad faith insurance attorney will ask your insurance company for the documents and records related to your claim and for other documents detailing the company’s procedures and policies.

The insurance adjuster or another representative of the company may be subpoenaed for a deposition or to testify in a court hearing. In certain cases, an insurance claims attorney may ask an insurance expert to make a statement or testify about insurance industry practices and that expert may be able to comment on whether in his or her opinion, the insurer’s actions were unreasonable and/or violated appropriate industry standards. Case law and State insurance statutes and regulations, such as California’s Fair Claims Regulations, will often provide the appropriate reasonable standards that insurers are required to follow.

If the company did not comply with these standards or even its own practices, procedures, and guidelines, a qualified and experienced bad faith insurance claims lawyer will be able to prove these bad faith claims practices, likely leading to success in your bad faith insurance lawsuit.

When Should You Speak to an Insurance Claims Attorney?

How can you find out if you are dealing with bad faith insurance practices? You could send a complaint to the California Department of Insurance, but we found that our clients who have done so have received no real help.

Realistically, you must consult a California bad faith disability, life, and accidental death insurance lawyer to know if you have sufficient grounds for a bad faith lawsuit and to know if the denial of your claim can be overturned. Schedule a consultation as soon as you suspect that you are dealing with insurance bad faith.

As mentioned above, in the State of California, a plaintiff who succeeds with a bad faith lawsuit may recover attorney fees and compensatory damages (including emotional distress damages), in addition to payment of the original claim. Your first consultation with an attorney is free and entails no obligation.

Do Not Be a Victim Twice

If you have made a claim on an insurance policy, you may be at a difficult point in your life. You may have lost a loved one accidentally, or you may have sustained a severe personal injury that disabled you or you may have become sick and needed medical attention for which you expect to be covered. You should not have to be victimized a second time by an insurance company’s bad faith.

As a policyholder, you have the right to be dealt with in good faith by your insurance company.
If you believe you are the victim of an insurer’s bad faith practices, contact McKennon Law Group PC for a free consultation.

What if you file an insurance claim, and instead of simply denying your claim, your insurance company informs you that your policy has been rescinded? The company may be operating in bad faith. You should arrange to discuss the matter at once with a California insurance claims attorney.

In what circumstances may an insurance company legally rescind your insurance policy? If you believe that your insurance claim was legitimate, do you have any legal recourse against the insurance company? Is there still any way for you to receive the payout the company owes you?

If you continue reading this brief discussion of rescinded insurance policies and bad faith insurance practices, these questions will be answered, and you will learn more about your legal rights as an insurance policyholder in California.

What Is “Rescinding” an Insurance Policy?

When an insurance company “rescinds” a policy, it treats the policy as if it never existed. In practical terms, it means the company is no longer obligated to pay claims for health insurance, life insurance, accidental death insurance, long-term disability insurance, or long-term care insurance.

Insurance companies may rescind an insurance policy in order to deny an insurance claim, but rescinding a policy is different from simply denying a claim. Determining that a policy, in effect, never existed compels the insurance company to refund any premiums that you have already paid.

Why Are Insurance Policies Rescinded?

Rescinding a policy can boost an insurance company’s profits. Rescinding policies eliminates policyholders who seek payouts while the company accepts payments from policyholders who are not seeking payouts. This could leave you with no coverage at precisely the time you need it.

By rescinding a policy, the company is claiming that the policy was invalid from the beginning. California insurance companies may rescind a policy if a policyholder made a false statement on the initial policy application, meaning that the policy was based on a “material falsehood.”

The company may claim, for example, that you denied being a smoker or that you failed to list DUI convictions when you completed the application. When a policy is rescinded, the company must send the policyholder a rescission notice and return the premiums or offer to do so.

When You Purchase a Policy, Take All the Time You Need

If you have purchased a life, accidental death, or disability insurance policy, you know how much paperwork is involved, including policy applications, supplemental applications, personal history questionnaires, policy notices, and medical documents.

You will answer dozens of questions when you purchase a policy. Take all the time you need to consider the questions thoughtfully, and get the answers right. Presume that anything you tell an insurance company could be used against you to deny a claim.

California insurance law requires all questions on disability, life or accidental death insurance applications to be clear, specific, and understandable. You can indicate if you are unsure of or cannot remember the answer to a particular health history or other question.

What Are Your Rights If Your Life, Accidental Death, or Disability Policy Is Rescinded?

Your insurance policy cannot be rescinded if the purportedly false statement made on the application was trivial or irrelevant, or if you did not know that you suffered from a latent medical condition, or if you did not understand the significance of your response at the time.

A policy is rarely rescinded unless you have made a claim. If an insurance company unlawfully rescinds your policy to avoid making a payout that the company owes you, that insurance company is operating in bad faith, and you should consult a lawyer about taking legal action.

Typically, a California insurance claims lawyer will write a letter on your behalf to the insurance company and demand a detailed explanation for the rescission of your policy. Simply by having a lawyer on the case, you will compel some insurance companies to reverse course.

How Will an Life, Accidental Death, or Disability Insurance Claims Attorney Handle Your Case?

If a letter from an insurance claims attorney does not change the insurer’s position, you may be able to take legal action against the insurance company for breach of contract and breach of the implied covenant of good faith for attempting to rescind your insurance policy.

When you turn to your insurer for a payout that you need – and you have faithfully paid the premiums – a denial of coverage that uses rescinding the policy as an excuse can be catastrophic, particularly if you have lost a loved one, if you are in poor health, or if you need long-term disability coverage.

Insurance bad faith laws provide that an insurance company cannot rescind a policy merely to get out of its legal obligation to pay a legitimate insurance claim. When an insurance company does not take its obligation to you seriously, you may have sufficient grounds for legal action.

How Can You Know If You Are an Insurance Bad Faith Victim?

You may submit a complaint about your policy’s rescission to the California Department of Insurance, but only a California insurance claims attorney will be able to tell you if the insurance company was operating in bad faith and whether you have grounds for taking legal action.

A California insurance claims lawyer will provide you with a free, no-obligation initial case evaluation. You will be able to receive the detailed, personalized legal advice that you’ll need, and you’ll be able to make a more informed decision about moving forward with a legal action.

Most insurance claims attorneys in California work on a contingency fee basis, which means that you pay no attorney’s fees until and unless the matter is resolved in your favor. In many bad faith cases, the insurance company will also be ordered by the court to pay your attorney’s fees.

When Should You Contact an Insurance Claims Lawyer?

Particularly if you have lost a loved one or if you are recovering from accidental injuries or from a serious illness, the last thing you need is your insurance company dealing with you in bad faith, complicating your life, and making your days even more difficult.

Some insurance companies in California are operated professionally and provide the services they are supposed to provide, but there are still many insurance companies that place profits above the legitimate claims of their policyholders.

If your insurance policy has been wrongfully rescinded, or if your life, accident, or disability insurance claim has been unreasonably denied, you should fight for the coverage you are owed. Contact an insurance claims lawyer at once to review your options or to begin the legal process.
If you believe you are the victim of an insurer’s bad faith practices, contact McKennon Law Group PC for a free consultation.