Insurance Bad Faith
Every contract contains an "implied covenant of good faith and fair dealing," where neither party will do anything to injure the right of the other to receive the benefits of the agreement. For public policy reasons, California has determined that an insurance company's failure to abide by this implied covenant should subject the insurance company to additional liability.
If an insurance company acts in bad faith it may, but not always, be subject to punitive damages. The law of insurance bad faith essentially requires an insurance company to act fairly and in good faith towards its policyholders and to consider the interests of its policyholders equal to its own interests. It also prohibits an insurance company from denying or delaying a claim unreasonably or without proper cause.
If an insurance company breaks this law, the policyholder can collect more than what is contractually owed under the policy. The policyholder can collect the insurance policy benefits and be further entitled to all damages caused by the unreasonable denial of benefits or unreasonable delay in processing the claim. This would include damages for emotional distress, economic losses and attorney fees. If the insurance company acts in an outrageous or malicious manner, then punitive damages can also be awarded by a jury.
It is important to realize that not every wrongful denial of benefits amounts to bad faith. A simple erroneous denial of benefits, without more, is merely a breach of the insurance contract and does not constitute insurance bad faith. It is only where the delay or denial of benefits is unreasonable, without proper cause, outrageous or malicious, that damages beyond the policy benefits themselves can be recovered in court.
Experienced Southern California insurance and insurance bad faith attorneys with demonstrated success in recovering damages from defendant insurance companies are available to represent you.