California Insurance Bad Faith Attorneys

At Arias Ozzello & Gignac, our attorneys can help both plaintiffs and defendants in insurance bad faith actions.

Insurance bad faith actions are very common in California.  Under California law, insurance companies owe a so-called “duty of good faith and fair dealing” to the persons they insure. This duty is often referred to as the "implied covenant of good faith and fair dealing." Under California law, the duty automatically exists by operation of law in every insurance contract.

Examples of “bad faith,” or violation of the “duty of good faith and fair dealing,” include:

• undue delay in handling claims
• inadequate investigation
• refusal to defend a lawsuit
• threats against an insured
• refusing to make a reasonable settlement offer, or
• making unreasonable interpretations of an insurance policy.

Jury Verdicts for Bad Faith Conduct by Insurance Companies

If an insurance company acts in bad faith, the insured person (or "policyholder") may sue the company for bad faith, in addition to a standard claim for breach of the insurance claim.

The advantage of the bad faith claim for the insured is that the court may award punitive or exemplary damages on top of the usual compensatory damages.  In other words, the plaintiff in an insurance bad faith case may be able to recover an amount that is much larger than the original face value of the policy.

In California, the plaintiff in a bad faith action may be able to recover some of its attorneys' fees separately and in addition to the judgment for damages against a defendant insurer.   

Types of Bad Faith Claims

There are two basic types of bad faith claims:  

• first-party bad faith claims
• third-party bad faith claims

A common first-party bad faith claim is when an insurance company writes insurance on property (such as a house or an automobile) that becomes damaged. The insurance company could be liable for first-party bad faith if it: 

• improperly investigates the claim
• grossly understates the value
• refuses to acknowledge the claim

Third-party bad faith can occur when the insurer wrongfully:

• refuses to defend where it has a “duty to defend” that claim
• refuses to indemnify a policyholder for a covered act
• refuses to pay the judgment or settlement of a covered lawsuit
• refuses to settle a reasonably clear claim against the policyholder within policy limits

Contact an Experienced Insurance Bad Faith Attorney

Arias Ozzello & Gignac has litigated as defense counsel for various insurance carriers. Insurance litigation has involved not only the defense of various claims against an insured, but also analysis of coverage and conflicts. Contact one of our experienced attorneys today regarding your insurance bad faith lawsuit.