When you purchase medical, vehicle, life or home insurance, you are buying financial protection in the case that something unexpected should occur. As part of your premium payments, the insurance company agrees to provide financial coverage if a situation arises that falls under the plans policy. In some cases, however, insurance companies may not hold up to their end of the bargain and could try to avoid paying their share of the insurance coverage when you file a claim.
This is known as bad faith insurance, and people who believe that their insurance company has engaged in a breach of contract may be able to file a claim against them and receive compensation. When you are involved in an accident or have a tragic event occur, your insurance company may contact you and ask for details surrounding the event. Once they have all of the information, they will make a decision as to whether they will cover the claim. If the details clearly show that the insurance agent should provide coverage for the client, and the insurance company denies the claim, this can bring reason to file a case against the insurance company as well. This is known as unreasonable refusal to settle, and insurance companies may use this in order to keep a hold of their money and avoid paying off the client.
In California, there is a statute of limitations on how long a person has to file a bad faith claim against an insurance company after the actual incident occurs. Victims of bad faith insurance often have four years to file a claim. Yet, this may be adjusted for certain situations.
This information is intended for educational purposes and should not be taken as legal advice.