California is known to have consumer friendly laws when it comes to insurance. With all the codes and regulations, it’s good to know the California Department of Insurance (CDI) published "Fair Claims Settlement Practice Regulations" under Title 10 of the California Code of Regulations. Although Title 10 encompasses many facets, the regulations provide a concise time limit for claims handling.

Section 2695.5 sets out limits insurers must comply with when adjusting claims:

  • When an agent or other insurance representative receives a claim, that claim must be immediately tendered to the insurer;
  • Within 15 days of Notice of a claim, the insurer must acknowledge receipt AND provide the insured with all necessary forms and instructions AND begin the investigation of the claim;
  • An Insurer must respond within 15 days of any inquiry from the insured and within 21 days of any inquiry from the California Department of Insurance;
  • Within 40 days of receipt of the notice of a claim, unless the insurance company otherwise advises the insured in writing with reasons for delay and updates the reasons for delay every 30 days, an insurer must accept or deny claims in whole or in part and affirm or deny liability;
  • Claims should be paid within 30 days after coverage is determined or a settlement agreement is reached (subject to a few exceptions).

These specific time frames are minimum standards for good faith adjustment practices.

Although an insurer can delay claims for 30 days with written notice, insureds should monitor such delays and can question the justification given for any delay. Policyholders should have no qualms about knowing and asserting their rights in a claims process.