When Is an Insurance Company Operating in Bad Faith?

Federal and state laws require insurance companies to act in good faith and to deal fairly with every policyholder and every claim. When you purchase an insurance policy, the company has a legal obligation to provide the coverage you’ve paid for and a duty to negotiate and resolve any reasonable insurance claim you make.

California law provides considerable legal protection to policyholders and to anyone whose injuries and damages may be covered by an insurance policy. If the company fails to fulfill its legal obligation—and you become a victim of what is legally termed “insurance bad faith”—you have the right to bring a lawsuit against the insurer. The legal team at the McKennon Law Group will work aggressively to win justice on your behalf.

What Can Happen When You File an Insurance Claim?

If you’re injured in a vehicle collision or another accident, the insurance company should compensate you quickly for emergency treatment and related medical expenses. However, even when victims clearly qualify for compensation, they often face “brush-offs,” unexplained delays, or outright deception.

Cases that arise from an insurance company’s bad faith are cases about betrayal. As a policyholder who has paid your premiums, you expect to receive the service you have already funded. When an insurer mishandles your claim, you may have no choice but to bring a lawsuit while trying to recover from a devastating injury.

How Does the Law Define Insurance Bad Faith?

If an insurance company either negligently or intentionally mishandles your insurance claim, the company is operating in bad faith. These practices include, but are not limited to:

Rejecting your claim for a fabricated, false, or unexplained reason.
Prolonging the investigation process needlessly or failing to investigate at all.
Failing to pay or deny a claim within a reasonable period of time.
Trying to con or coerce you into a settlement offer for less than the true value of your claim.
Failing to negotiate in good faith to resolve a valid claim.

Simply retaining an attorney and showing that you’re serious may be enough to motivate an insurance company to fulfill its obligation to you.

How Can You Prove Bad Faith?

A lawsuit for insurance bad faith must be based on particular facts. You and your attorney must prove that the mishandling of your claim was more than a simple clerical mistake and constituted either negligence or intentional bad faith. To help build your case, you should:

Document Everything: Store copies of all pertinent documents, including policies, letters, and medical bills.
Keep a Communication Log: Take detailed notes of every conversation with the insurance company, including the time, date, and the name of the representative.
Retain Professional Counsel: An attorney can determine if you have the proper standing to file a lawsuit and if the insurer’s actions meet the legal threshold for bad faith.

How Will Your Attorney Fight for You?

If you pursue a lawsuit against an insurance company, the attorneys at the McKennon Law Group will provide the following support:

Investigation: We will investigate the insurer’s actions and may demand all documents related to the claim, as well as the company’s internal procedures and policies.
Expert Testimony: We may depose company representatives or call on insurance industry experts to testify regarding standard industry practices.
Seeking Full Compensation: If we prevail, the insurance company must provide the compensation you seek. In many cases, you may also be awarded your legal fees in addition to the payout for your underlying injury claim.

When Should You Contact an Attorney?

If you’re the victim of an insurance company’s bad faith—or if you’re simply not sure—you should arrange at once to discuss your options. Whether you have an individual policy, a business policy, or are covered under a group plan, the McKennon Law Group can help.

For more than seventy years, our attorneys have fought effectively for the rights of insurance policyholders and injury victims throughout California. We know how to resolve the most complicated disputes and hold insurance companies accountable.

Schedule a No-Cost Legal Consultation

To learn more, or to take legal action now, call the McKennon Law Group at (800) 682-4137 for a free legal consultation with no obligation. Our law offices are conveniently located in: