Car accidents are stressful experiences, but for many drivers, they pale in comparison to the insurance claims process. Car insurance companies like State Farm will often take their time to pay out claims and make their policyholders jump through hoops to get reimbursed for their vehicle repairs and medical bills.
In some cases, State Farm will take things even further by acting unreasonably and unfairly towards their policyholders during the claims process. This constitutes “bad faith” and may subject State Farm to legal liability as insurance companies must act in good faith with their California policyholders.
If you believe State Farm has acted unreasonably towards you, you may have a bad faith legal claim against them. To learn more about what rights you have and how to take advantage of them, contact Maison Law for a free, no-obligation consultation. Our insurance bad faith lawyers have years of experience handling insurance bad faith claims and know what it takes to recover fair and reasonable compensation.
Insurance Bad Faith in California
In California and the rest of the United States, insurance companies have a contractual obligation with their policyholders to act in good faith when handling their policyholders’ claims. Policyholders have a duty to pay their premiums, and in return, insurance companies have a duty to process and payout covered claims in a prompt manner.
This good faith requirement doesn’t mean the insurance company has to make decisions only in their policyholder’s favor, but instead means they shouldn’t act unfairly. This means the insurance company can’t:
- Fail to communicate with policyholders or take an unreasonable amount of time to respond to inquiries.
- Delay claims processing.
- Delay payment of a covered claim for no good reason.
- Deny a claim without giving a justification for the claim denial.
- Make unreasonably low settlement offers.
- Misrepresent the terms of the insurance policy.
- Refuse to settle a claim against their insured for a fair amount when the insured’s liability is clear.
Many of these prohibited scenarios can be found in California’s Unfair Claims Settlement Practice Regulations.
Customer Problems With State Farm
Despite their advertising campaign’s slogan, State Farm often fails to act like a “good neighbor.” When this happens, it can result in State Farm getting sued in bad faith insurance lawsuits, as well as being subject to fines and other regulatory action. Below is a list of some of the more common customer complaints lodged against State Farm:
- Low-ball settlement offers. In an attempt to resolve claims as quickly as possible, State Farm may make low-ball settlement offers that aren’t even close to providing full compensation for lost income, medical bills, and property repair or replacement costs. It’s also possible these unfairly low offers are deliberately made to save money.
- Claim delays and denials. There have been cases where liability and the amount of claimed damages are clear, yet State Farm drags their feet for weeks or months before paying out covered claims.
- Improper insurance policy cancellations. In most cases, State Farm can decide to stop offering coverage to a particular policyholder. However, State Farm must offer sufficient notice and meet other cancellation requirements, which sometimes don’t happen.
- Deceptive pricing. There are special rules on how and when State Farm and other insurance companies can raise premiums. Unfortunately, State Farm doesn’t always follow these rules.
- Bad faith actions. State Farm might calculate covered losses at unrealistic values or deny valid and covered claims without a reasonable basis for doing so.
The Best Way to Handle a State Farm Bad Faith Claim
If you suspect that State Farm is handling your insurance claim in bad faith, don’t try to take them on by yourself. Remember, State Farm is one of the largest insurance companies in the United States and they have plenty of experience defending bad faith allegations. So before you start making accusations at State Farm, you want to be prepared to prove bad faith. To do this, you’ll want to:
- Consult with a bad faith insurance attorney, such as one from Maison Law, and
- Identify and record all instances of bad faith. This may include taking notes on when something happened (or didn’t happen), as well as taking screen shots and saving emails or other electronic forms of communication with State Farm.
Proving Insurance Bad Faith
When trying to prove bad faith within the context of an insurance claim, you’ll need evidence that shows a valid and enforceable insurance contract in effect, along with one or more of the following:
- An unreasonable delay when processing a claim. State Farm needs time to process the information you give them. But that doesn’t mean they can take months to do what should take just a few days or weeks to complete.
- An unreasonable denial of an insurance claim. State Farm may have ignored evidence that supports your claim, asked that you provide an unreasonable amount of information to support your claim (then denies your claim for lack of cooperation when you couldn’t comply with all of the requests), or misrepresented insurance policy information that led to your claim denial.
- Failure to complete a proper investigation. State Farm is allowed to investigate your claim before paying out benefits. However, this doesn’t give State Farm the right to ignore evidence, deny a claim without justification, or take an excessive amount of time for the investigation.
Recoverable Damages In a Bad Faith Insurance Lawsuit
If you succeed in your insurance bad faith claim against State Farm, you could be eligible to recover one or more of the following damages:
- Contract damages: These damages represent what you should have received had State Farm honored its contractual obligations. Contract damages are typically the amount of the claim’s value, plus interest.
- Extracontractual damages: These are damages designed to compensate you for your emotional damages and financial losses, including attorney’s fees. This often includes financial losses sustained because of State Farm’s bad faith. For instance, if you defaulted on bills or other financial obligations because State Farm refused to pay for a covered claim, extracontractual damages can compensate you for your damaged credit.
- Exemplary damages: Also known as punitive damages, these are intended to punish State Farm for its bad faith. According to Section 3294 of the California Civil Code, an insurance company can be liable for exemplary damages if they’re guilty of oppression, fraud, or malice.
When recovering punitive (exemplary) damages, “malice” means intentional conduct intended to hurt the policyholder or an insurance company’s conduct that is done willfully and with conscious disregard for the policyholders’ rights or safety.
“Oppression” refers to despicable conduct that subjects the policyholder to cruel or unjust hardship in conscious disregard of the policyholder’s rights.
“Fraud” means intentional misrepresentation, concealment, or deceit concerning a material fact known by the insurance company made with the intent to deprive the policyholder of their property or legal right.
Talk to an Insurance Bad Faith Lawyer From Maison Law
Dealing with an uncooperative or unfair State Farm employee after an accident or other covered loss is adding insult to injury. And in some cases, State Farm’s conduct could result in additional damages to you, including financial, professional, and emotional harm. Thankfully, California allows policyholders to recover for this type of harm by filing a bad faith insurance civil case against their insurance company.
To learn if you have a bad faith claim against State Farm and if so, what to do about it, contact Maison Law to schedule a no-obligation, no-cost consultation. Our bad faith lawyers understand how State Farm operates and what it takes to prove insurance bad faith in California. We don’t charge you a thing unless we recover money on your behalf. You have nothing to lose, so there’s no reason not to get in touch with us.
