In California, a carrier’s bad faith liability includes conduct beyond what is set out in the Insurance Code (statutory) and the Fair Claims Settlement Practices Act regulations. Bad faith conduct is also expressed through case law. Some of this additional bad faith conduct is summarized below. Effectively communicating an insurer’s bad faith conduct is essential to resolving insurance disputes. When you see bad faith conduct, a best practice is to bring the conduct to the carrier’s attention and explain why such conduct is prohibited.

A summary of some bad faith conduct expressed through case law is as follows:

Avoid broadly accusing a carrier of “bad faith” with no other support or directly accusing a carrier of bad faith because of a certain act. Rather, focus on the specific bad faith acts and the authority stating that the conduct is prohibited. For example, resist the urge to state, “You are in bad faith because you have not conducted a thorough investigation.” Rather, try and state the following: “You have an obligation not to deny any portion of a claim without performing a thorough investigation.1 You, however, failed to fulfil this obligation because you knew your insured was obtaining an expert report on the scope of covered damage, yet you denied further coverage before the report was received. The claim therefore should be reopened and the claim further evaluated for coverage”

As always, knowing and monitoring all of these duties will enhance your representation of insureds and build your credibility with carriers.
1 Egan v. Mutual of Omaha Ins. Co. (1979) 24 Cal.3d 809, 819.