When you have suffered a personal or business loss, the last thing you want to confront is your insurer telling you that it will not honor your claim. You buy insurance so that in times of harm, loss or catastrophe, you have some financial protection. When your insurer refuses to provide that protection despite the fact that it has been taking your premiums, it is infuriating, and it compounds the loss you have already sustained.
There can be legitimate disputes about whether a loss is covered or to what extent a loss is covered. Such disputes can often be resolved by persuasion and negotiation with the help of a qualified and experienced litigation attorney. But sometimes, the insurer is not taking a legitimate position in the dispute. Sometimes the insurer knows or certainly should know that its position cannot be justified, and it just doesn’t care. It is determined to hold on to your insurance money for as long as possible. It is denying your claim even when it knows it is wrong to do so. It is denying your claim in the hopes that you will just go away.
In such circumstances, you most assuredly need to hire a business litigation lawyer with experience in bad faith insurance litigation. Such insurers will rarely if ever settle a claim with you until it is convinced that the dispute is going to be presented to a jury. Fortunately, California law provides excellent protection for businesses and consumers who face bad faith insurance denials from their insurers.
In every insurance policy, there is an implied covenant of good faith and fair dealing that neither the insurer nor the insured “will do anything which will injure the right of the other to receive the benefits of the agreement.” Comunale v. Traders & General Ins. Co., 50 Cal.2d 654, 658-59, 328 P.2d 198 (1958). Breach of the implied covenant by an insurer “sounds in both contract and tort,” and “constitutes what is commonly called ‘bad faith.’” Archdale v. American Int’l Specialty Lines Ins. Co., 154 Cal.App.4th 449, 466, 64 Cal. Rptr. 3d 632 (2007); see also Jordan v. Allstate Ins. Co., 148 Cal.App.4th 1062, 1071, 56 Cal. Rptr. 3d 312 (2007) (“An insurer is said to act in ‘bad faith’ when it not only breaches its policy contract but also breaches its implied covenant to deal fairly and in good faith with its insured”).
The covenant of good faith and fair dealing is of “peculiar importance in insurance law because it may support the recovery of a tort measure of damages.” Shade Foods, Inc. v. Innovative Products Sales & Marketing, Inc., 78 Cal.App.4th 847, 879, 93 Cal. Rptr. 2d 364, (2000) (citing Comunale, 50 Cal.2d. at 658). To establish a claim for insurance bad faith, a plaintiff must show that the “conduct of the defendant demonstrates a failure or refusal to discharge contractual responsibilities, prompted not by an honest mistake, bad judgment, or negligence, but rather by a conscious and deliberate act, which unfairly frustrates the agreed common purposes and disappoints the reasonable expectations of the other party thereby depriving that party of the benefits of the agreement.” Careau & Co. v. Security Pacific Business Credit, Inc., 222 Cal.App.3d 1371, 1395, 272 Cal. Rptr. 387 (Ct. App. 1990); see also Love v. Fire Insurance Exchange, 221 Cal.App.3d 1136, 1151, 271 Cal. Rptr. 246 (1990) (to establish bad faith, an insured party must show benefits due under the insurance policy were withheld and the reason for withholding benefits was unreasonable or without proper cause). Root v. Golden Eagle Ins. Corp., 2012 U.S. Dist. LEXIS 172759, 13-15 (E.D. Cal. Dec. 4, 2012)
If you are in a dispute with your insurance company, whether it is a business or commercial policy, a homeowner’s policy or an automobile policy, talk to an attorney at the Boesch Law Group. When an insurer denies a claim in bad faith, the victim is entitled to remedies beyond even what the full coverage of the policy is. The policy holder may additionally recover damages for the emotional harm caused by the insurer, attorneys’ fees and even punitive damages to punish the insurer if the insurer’s conduct has been intentional or reckless.
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