When you file an insurance claim, you expect your insurance company to handle it fairly and promptly. California law requires insurance companies to act in good faith and deal fairly with you at all times. However, some insurers deny valid claims, delay payments, or offer inadequate settlements. This is called bad faith insurance, and it violates California law. If your insurance company has treated you unfairly, you have legal options to fight back and recover the compensation you deserve. DJA Injury Attorneys has extensive experience helping California residents pursue bad faith insurance claims against their insurers.
What Is Bad Faith Insurance?
Bad faith insurance occurs when an insurance company unreasonably fails to uphold its end of the bargain. California law recognizes an implied covenant of good faith and fair dealing in every insurance contract. This means your insurance company must investigate your claim thoroughly, process it promptly, and pay benefits that are actually owed under your policy.
First-party bad faith involves claims you make against your own insurance company. California recognizes first-party bad faith claims, which means you can sue your insurer if it breaches this covenant. The law requires insurance companies to investigate, process, and pay your claim fully and fairly. When they fail to do so without reasonable justification, they commit bad faith. This is distinct from third-party claims, where you’re claiming against someone else’s insurance.
This legal protection exists because insurance contracts are different from other business agreements. You purchase insurance to protect yourself during times of crisis. Insurance companies have a duty to treat you fairly and not take advantage of your vulnerability when you need help most. The California Supreme Court has consistently upheld this principle in numerous decisions protecting consumers.
Common Signs Your Insurance Company Is Acting in Bad Faith
Recognizing bad faith conduct is the first step toward protecting your rights. Watch for these warning signs:
- Unreasonable claim denial without proper justification or explanation
- Failure to investigate your claim thoroughly before making a decision
- Delayed claim processing or payment without valid reason
- Underpayment of legitimate claims that clearly fall within your policy coverage
- Misrepresenting policy terms or coverage to deny your claim
- Offering inadequate settlement amounts that don’t reflect your actual damages
- Ignoring your communications or failing to respond to your requests for information
If you notice any of these patterns, your insurance company may be acting in bad faith. Document everything—keep copies of all communications, claim documents, and correspondence with your insurer. When you’re ready to take action, DJA Injury Attorneys can review your case and explain your legal options. Our personal injury attorneys have helped countless clients recover compensation from uncooperative insurers.
Why Choose DJA Injury Attorneys
DJA Injury Attorneys brings a unique perspective to bad faith insurance cases. Founder and Principal Attorney Jeff Schwalbach has 11 years of legal experience, including 4 years as a personal injury attorney advocating for injured clients. He holds the distinction of being named a Super Lawyers Rising Star for six consecutive years (2019-2024). This recognition places him in the top 2.5% of attorneys in California.
What sets DJA Injury Attorneys apart is Jeff’s background as a former insurance defense attorney. He understands how insurance companies think, how they evaluate claims, and the tactics they use to minimize payouts. This insider knowledge allows him to recognize bad faith conduct that other attorneys might miss and to anticipate insurance company arguments before they’re made.
DJA Injury Attorneys handles bad faith cases on a contingency fee basis, meaning you pay nothing upfront. The firm offers free consultations and maintains 24/7 availability to discuss your case. Jeff Schwalbach works directly with clients, providing personal attention rather than handing your case off to junior staff. His track record speaks for itself—he has secured settlements exceeding $1 million in multiple cases where insurers initially offered far less.
How Insurance Companies Violate California Law
Insurance companies violate California law in several ways. Understanding these violations helps you recognize when your insurer has crossed the line from tough negotiation into illegal bad faith conduct.
Failure to investigate properly is one of the most common violations. Under California Insurance Code § 790.03 (the Unfair Practices Act), the state strictly defines unfair claims settlement practices. While you cannot sue an insurer directly under this specific statute, California courts use these rules to establish the standard of care for a ‘bad faith’ lawsuit. When an insurer violates these established standards—like failing to conduct a fair and objective investigation—it serves as powerful evidence of bad faith.
Denying claims based on incomplete or inaccurate information is another violation. Insurance companies must base their decisions on complete facts. If they deny your claim without reviewing all available evidence, or if they misrepresent what your policy covers, they’re acting in bad faith. Courts have found that insurers cannot rely on selective evidence gathering to justify denials.
Blanket denials without individual claim review violate the law. Some insurers use blanket policies to deny entire categories of claims without examining each claim on its merits. This practice ignores the requirement that each claim receive individual consideration. California courts have consistently ruled against this practice.
Unreasonable delays in processing claims also constitute bad faith. While insurers have time to investigate, they cannot delay indefinitely. Unnecessary delays cause financial hardship and demonstrate the insurer’s disregard for your situation. If you’re experiencing delays with your car accident claim or other insurance matter, contact DJA Injury Attorneys immediately.
Insufficient settlement offers that don’t reflect your actual damages show bad faith. If an insurer offers a fraction of what your claim is worth, especially when evidence clearly supports a higher value, they’re acting unreasonably. Our case results demonstrate how we’ve recovered substantially more than initial insurer offers.
What Damages Can You Recover?
Bad faith claims allow you to recover multiple types of damages. Understanding what you can recover helps you evaluate whether pursuing a bad faith claim makes sense for your situation.
Contract damages are the benefits owed under your insurance policy. If your insurer wrongfully denied your claim, you can recover the full amount they should have paid. This is the baseline recovery in any bad faith case.
Extracontractual damages go beyond the policy limits. These include emotional distress caused by the insurer’s conduct, attorney fees and costs you incurred fighting the bad faith claim, and other losses directly caused by the insurer’s misconduct. California law permits recovery of these damages in bad faith cases.
Punitive damages may be available in cases involving fraud or oppression. These damages punish the insurance company for particularly egregious conduct and deter similar behavior in the future. California Civil Code § 3294 allows punitive damages when an insurer acts with malice, oppression, or fraud.
The total recovery in a bad-faith case can exceed your policy limits significantly. For example, if your policy limit is $100,000 but the insurer’s bad faith conduct caused you emotional distress and forced you to hire an attorney, you might recover the $100,000 in contract damages plus additional amounts for extracontractual damages. DJA Injury Attorneys has recovered substantial damages for clients in similar situations, as shown in our case results.
Frequently Asked Questions
What is the implied covenant of good faith and fair dealing?
This means your insurance company must act honestly, fairly, and reasonably when handling your claim. They cannot use technicalities or loopholes to avoid paying legitimate claims. Rather than being written into a specific statute, this principle is a powerful common law doctrine established by the California Supreme Court, which automatically reads this covenant of good faith into every insurance policy issued in the state.
How long do I have to file a bad faith claim?
California’s statute of limitations for bad faith claims depends on the type of claim. Breach of contract claims have a four-year limitation period, while tort-based bad faith claims have a two-year limitation period. The two-year tort timeline is important because it allows recovery beyond policy limits, including emotional distress and punitive damages. However, this timeline can be complex, and certain circumstances may shorten or extend it, including tolling provisions and policy-specific limitations. You should consult with an attorney promptly if you believe your insurer has acted in bad faith. Waiting too long could result in losing your right to sue. Contact DJA Injury Attorneys today to discuss your timeline.
Can I sue my insurance company for bad faith?
Yes, California law allows you to sue your insurance company for bad faith. You can pursue a bad faith claim if your insurer has breached the implied covenant of good faith and fair dealing. The process involves filing a lawsuit, gathering evidence of the bad faith conduct, and presenting your case to a judge or jury. Many bad-faith cases settle before trial, but you have the right to take your case to court if necessary. DJA Injury Attorneys has extensive experience litigating these cases.
What evidence do I need to prove bad faith?
You’ll need documentation showing the insurer’s unreasonable conduct. This includes your original claim and all communications with the insurance company, the insurer’s denial letter or explanation of their decision, evidence that contradicts their stated reason for denial, expert opinions on what your policy actually covers, and medical records or other documentation of your damages. An experienced bad-faith attorney can help you gather and organize this evidence effectively.
How much is my bad faith claim worth?
The value of your bad faith claim depends on several factors: your policy limits, the extent of your actual damages, the strength of evidence showing bad faith, and the insurer’s degree of misconduct. Some claims are worth tens of thousands of dollars, while others exceed $1 million. The only way to know your claim’s value is to have an attorney evaluate your specific situation. DJA Injury Attorneys offers free consultations to discuss what your case might be worth.
Take Action Today
If you believe your insurance company has treated you unfairly, don’t wait. Bad faith claims have time limits, and evidence can disappear. Contact DJA Injury Attorneys today for a free consultation to discuss your situation.
Call (949) 229-7228 or visit our contact page to schedule your free consultation. We’re available 24/7 to answer your questions. There are no upfront costs—we handle bad faith cases on a contingency fee basis, meaning you pay nothing unless we recover compensation for you.
Jeff Schwalbach and the team at DJA Injury Attorneys understand the frustration of dealing with an uncooperative insurance company. We have the experience, knowledge, and determination to fight for your rights and hold insurers accountable for bad faith conduct. Let us help you get the compensation you deserve.