Insurance Claims, Bad Faith, and Failure to Defend FAQs
The law office of Oksenendler Law, P.C. presents the following answers to questions our attorneys frequently encounter as we represent consumers in actions against their insurance companies for refusal to pay claims, failure to defend, coverage disputes, and bad faith. If you have other questions or need advice and representation in a particular matter, contact Oksenendler Law, P.C. for a free consultation with one of our experienced lawyers.
How can an insurance company take my premiums but refuse to pay when I have a claim?
Insurance is a business; insurance companies make money by collecting all they can in premiums and paying out as little as they can in claims. It is reasonable to expect an insurance company to investigate and deny claims that are not covered. However, it is important that these actions not be taken in bad faith. Any claims denial should be looked at very closely, as well as any settlement offer that only covers a portion of your claim.
When does an insurance company have a duty to defend me if I’m being sued?
Like many insurance-related questions, the answer depends upon the terms of your policy. Commercial general liability (CGL) policies, automobile policies, homeowners’ policies, and other types of policies all tend to include the duty to defend and pay a covered claim.
These policies also tend to spell out what events are covered and excluded from coverage. However, remember that even if a policy excludes some event from coverage (the duty to pay benefits), it may still have a duty to defend if you are sued under that same type of occurrence. The current trend for insurers is toward limiting their duty to defend.
How can I make my insurance company defend me?
If there is a dispute about coverage, you can go to court and seek a declaratory judgment. In most cases, you only have to prove that the potential for coverage exists to prevail on this issue. The insurer can always represent you under a reservation of rights, and you may still have to litigate the matter further if they refuse to pay any judgment levied against you.
What is the difference between the duty to defend and the duty to indemnify?
Indemnification means the insurer will pay any claim against you for which you are liable. For instance, if you are sued for causing an automobile accident, your insurer has the choice to settle the claim or defend you at trial. If you go to trial and lose, the insurer must indemnify you by paying the judgment on your behalf. Sometimes, the insurer may even be liable for any excess verdict beyond the policy limits.
Can I sue the other party’s insurance company for bad faith if they refuse to accept my reasonable settlement offer?
No. Only the policyholder can sue the insurance carrier for bad faith because the covenant of good faith is based on the contractual relationship between the two. Suppose you are involved in a personal injury lawsuit against an individual or a direct action against the negligent defendant’s insurance company. In that case, you will be compensated for your damages if you can prevail in court and have a jury verdict entered against the defendant.
What kind of damages can I recover in a bad faith action?
In most cases, you will be entitled to both economic and non-economic damages, such as the benefits you are entitled to under the policy, as well as damages such as emotional distress you have suffered because of the insurance company’s actions and can prove in court. Punitive damages may be available if the insurer’s conduct was particularly egregious, and some jurisdictions allow you to recover attorney’s fees as well.
At Oksenendler Law, P.C., we take cases on a contingency fee basis, meaning that our fees are a percentage of any recovery we obtain for you. If we don’t recover, we do not charge a fee. Learn more about how we can advocate for you by contacting our San Francisco insurance law firm today.
