What the claim involves
A low offer is not always bad faith. An unreasonable one can be.
Every insurance policy carries an implied promise that the insurer will deal fairly and in good faith with its policyholder, which means giving at least as much consideration to the policyholder’s interests as to its own (CACI No. 2330). When an insurer unreasonably fails to pay, or delays paying, benefits it owes, meaning it had no proper cause for its conduct, the policyholder can sue for the harm that conduct causes, not only for the unpaid benefits (CACI No. 2331). An insurer must also conduct a full, fair, prompt, and thorough investigation of all the bases of a claim, and diligently search for and consider evidence that supports coverage (CACI No. 2332). An honest disagreement about value is not bad faith by itself: a genuine dispute over coverage or value goes to whether the insurer had proper cause, though the insurer may still owe the benefits.
Kyle Scott Law represents Orange County policyholders in injury-related insurance disputes, most often uninsured and underinsured motorist (UM/UIM) claims, along with medical payments claims and a liability insurer’s refusal to settle within its limits. The firm handles disputes over coverage bought for injuries, not property, health, disability, or life insurance claims. It reviews the policy and every letter from the insurer, builds the record of what the insurer knew and when, and handles the UM arbitration and any bad-faith lawsuit that follows. Your first conversation is with attorney Kyle J. Scott, admitted to the State Bar of California in 1991.
Your own insurer
Uninsured and underinsured motorist coverage, medical payments coverage, and other benefits you bought for yourself are first-party coverage, and the duty of good faith runs directly to you. If you and your insurer disagree about whether you are entitled to UM/UIM benefits, or how much, a single neutral arbitrator decides (Insurance Code § 11580.2(f)), and within two years of the accident you generally must sue the uninsured driver, reach an agreement, or formally demand arbitration by certified mail (§ 11580.2(i)). A bad-faith claim about how the insurer handled the claim is a separate lawsuit.
When you are the one being sued
A liability insurer that unreasonably fails to accept a reasonable settlement demand within its policy limits can be liable to its own policyholder for the harm that follows, including a judgment above the limits (CACI No. 2334). The claim belongs to the policyholder. A person injured by someone else claims against the at-fault person, and the injured person’s own UM/UIM coverage may fill a gap when the at-fault person’s limits fall short.
Claims-handling time limits
California’s Fair Claims Settlement Practices Regulations generally require an insurer to acknowledge a claim within 15 calendar days (Cal. Code Regs., tit. 10, § 2695.5(e)), to accept or deny it within 40 calendar days of proof of claim and explain a first-party denial in writing (§ 2695.7(b)), to give written notice every 30 calendar days if it needs more time (§ 2695.7(c)(1)), not to make unreasonably low offers (§ 2695.7(g)), and to pay accepted amounts within 30 calendar days (§ 2695.7(h)). A written denial must tell the claimant that the California Department of Insurance can review it (§ 2695.7(b)(3)). The Insurance Code’s list of unfair claims practices (§ 790.03(h)) does not create a private lawsuit, but a jury may consider those standards in deciding whether an insurer acted unreasonably (CACI No. 2337).
What a bad-faith claim can recover
Damages can include the cost of the attorney fees incurred to recover the policy benefits, though not fees incurred for other purposes (CACI No. 2350). Punitive damages require clear and convincing evidence of oppression, fraud, or malice, are not available for a breach of contract alone, and, against a company, require that an officer, director, or managing agent knew in advance that the employee was unfit and kept the employee on in conscious disregard of others’ safety, authorized or ratified the conduct, or was personally guilty of it (Civil Code § 3294).
Cases the firm reviews
Common insurance bad faith matters.
Information that can matter
A strong claim starts with preserved evidence.
The useful records vary by case. The initial review identifies what exists, what may need to be requested, and what should be preserved before it is lost.
Legal guides
Answers to common insurance bad faith questions.
Common questions
Questions about insurance bad faith claims.
What counts as insurance bad faith in California?
Bad faith is an insurer’s unreasonable failure to give its own policyholder the benefits of the policy, such as denying a valid claim, delaying payment without proper cause, or failing to investigate the claim fully and fairly (CACI Nos. 2331, 2332). California treats it as a breach of the implied obligation of good faith and fair dealing, which can support damages beyond the unpaid benefits (CACI No. 2330). A disagreement about value is not bad faith by itself if the insurer’s position is reasonable and held in good faith.
Can I sue the other driver’s insurance company for bad faith?
Generally, no. California’s bad-faith claims belong to the insurer’s own policyholder (CACI Nos. 2331, 2334), and the Insurance Code’s list of unfair claims practices (§ 790.03(h)) does not give anyone a private right to sue (CACI No. 2337). Your claim is against the at-fault person, which that person’s insurer usually defends and pays. If their limits are too low, your own underinsured motorist coverage may help. Unfair practices can still be reported to the Department of Insurance.
My insurer is offering far less than my UM claim is worth. What can I do?
Put your evidence in writing and keep copies of everything. If you and your insurer cannot agree, a UM or UIM dispute goes to arbitration (Insurance Code § 11580.2(f)). Within two years of the accident, you generally must sue the uninsured driver, reach an agreement, or formally demand arbitration by certified mail (§ 11580.2(i)). If the insurer’s handling was unreasonable, a separate bad-faith claim may follow.
How long do I have to bring a bad-faith lawsuit?
It depends on the claim. California generally allows four years for a claim founded on a written contract, such as the policy (Code of Civil Procedure § 337(a)), and two years for an obligation not founded on a writing (§ 339), and which period governs a bad-faith claim can depend on whether it seeks contract or tort damages. Many policies contain shorter time limits of their own, and UM claims have a separate two-year step (Insurance Code § 11580.2(i)). Bring the policy and denial letters to a consultation early.
Can I recover my attorney’s fees?
Partly, in a successful bad-faith case. The damages can include the attorney fees incurred to recover the policy benefits the insurer withheld, but not fees incurred for other purposes, such as the parts of the case that seek other damages (CACI No. 2350).
Are punitive damages available against an insurer?
Sometimes. Civil Code § 3294 allows punitive damages only on clear and convincing evidence of oppression, fraud, or malice, and not for a breach of contract alone. Against a company, the conduct generally must involve, or be authorized or ratified by, an officer, director, or managing agent. Whether punitive damages are realistic depends on what the claim file and witnesses show.
This page provides general information, not legal advice. A consultation is needed to evaluate the facts, deadlines, parties, and law that may apply to a specific matter.
Sources
Official sources.
The figures and rules of law on this page come from these official sources.
- Judicial Council of California, Civil Jury Instructions (CACI) Nos. 2330 (implied obligation of good faith and fair dealing), 2331 (failure or delay in payment), 2332 (failure to investigate), 2334 (refusal to accept a settlement within limits), 2337 (factors in evaluating the insurer’s conduct), and 2350 (damages for bad faith) (2026 edition)
- California Insurance Code § 11580.2 (uninsured motorist arbitration and deadlines)
- California Department of Insurance — Fair Claims Settlement Practices Regulations (10 Cal. Code Regs. § 2695.1 and following)
- California Department of Insurance — consumer help and complaints
- California Insurance Code § 790.03 (unfair claims settlement practices)
- California Civil Code § 3294 (punitive damages)
- California Code of Civil Procedure § 337 (four years on a written contract)
- California Code of Civil Procedure § 339 (two years on an obligation not in writing)
Related practice areas