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When the Insurer Is the Problem
California Insurance Bad Faith Lawyer
After an accident, most of the fight is with an insurance company. California law expects that company to investigate, respond and pay on a schedule, and to treat its own policyholder fairly when a settlement offer arrives. The Law Offices of Burg & Brock represent injured people when an insurer delays, lowballs or refuses a reasonable settlement.
No attorney’s fee unless we recover for you.
Cameron Yadidi Brock
- Role
- Founding Attorney
- Bar
- California #183112
- Since
- Practicing 1996
Reviewed by Cameron Yadidi BrockFounding Attorney, Law Offices of Burg & Brock · California State Bar #183112 · Admitted 1996
The Short Answer
What Is Insurance Bad Faith in California?
Bad faith is an insurer’s unreasonable failure to honor the policy. Examples include denying or delaying benefits without a proper investigation, or refusing a reasonable offer to settle within the policy limits. The duty runs to the people the policy covers, so who can sue depends on whose insurer it is.
If you were hurt by another driver, that driver’s insurer owes its duties to its own customer, not to you. If the insurer is yours, for uninsured motorist or medical payments coverage, the duty runs to you.
Either way, a slow or low claim is not automatically bad faith. The question is whether the insurer acted unreasonably on the facts it had.
The Legal Basis
The Implied Covenant of Good Faith and Fair Dealing
Every California insurance policy carries an unwritten term: the insurer will do nothing to deprive its policyholder of the benefits of the policy. The California Supreme Court set this out for liability policies in Comunale v. Traders & General Ins. Co. (1958) 50 Cal.2d 654. It extended the duty to first-party benefits in Gruenberg v. Aetna Ins. Co. (1973) 9 Cal.3d 566, holding that a breach sounds in tort as well as contract.
In Egan v. Mutual of Omaha Ins. Co. (1979) 24 Cal.3d 809, the court said an insurer cannot reasonably deny payment without thoroughly investigating the basis for the denial. In Wilson v. 21st Century Ins. Co. (2007) 42 Cal.4th 713, it confirmed the other side: an insurer that denies or delays because of a genuine dispute, reached in good faith after a fair investigation, is not liable in tort for that reason alone.
First Party or Third Party
Whose Insurance Company Are You Dealing With?
An injured person usually deals with two insurers at once. The rules for each are different.
Your Own Insurer (First Party)
This covers benefits you bought: uninsured and underinsured motorist coverage, medical payments, or a health or disability policy. California’s claim regulations count anyone seeking uninsured motorist benefits as a first party claimant (10 CCR 2695.2(f)). If the insurer unreasonably withholds what the policy owes, you may have a bad faith claim against it. Disagreements over uninsured motorist claims generally go to arbitration under Insurance Code section 11580.2(f).
The At-Fault Party’s Insurer (Third Party)
This is the company defending the person who hurt you. Its duty to settle protects its own policyholder, so an injured claimant cannot sue it directly for bad faith (Murphy v. Allstate Ins. Co. (1976) 17 Cal.3d 937). The insurer still has to follow the claim regulations with you, and if it refuses a reasonable demand within its limits, the policyholder’s claim against it can later be assigned to you. That is covered in Policy-Limits Demands below.
The Rulebook
California’s Claim-Handling Deadlines
The Fair Claims Settlement Practices Regulations (California Code of Regulations, Title 10, section 2695.1 and following) set minimum standards for how insurers handle claims. Most apply to first and third party claimants alike.
The regulations also bar settlement offers that are unreasonably low (2695.7(g)) and require a thorough, fair and objective investigation (2695.7(d)). If you are not represented, an insurer that plans to rely on a filing deadline must warn you in writing at least 60 days before it expires, or 30 days for an uninsured motorist claim (2695.7(f)). A written denial must tell you that you can have it reviewed by the California Department of Insurance (2695.7(b)(3)).
Behind the regulations sits Insurance Code section 790.03(h), which lists 16 unfair claims practices. One of them is “not attempting in good faith to effectuate prompt, fair, and equitable settlements of claims in which liability has become reasonably clear.”
In Moradi-Shalal v. Fireman’s Fund Ins. Companies (1988) 46 Cal.3d 287, the Supreme Court held that section 790.03 does not let a private person sue an insurer for violating it. Enforcement belongs to the Insurance Commissioner. The court noted that common law claims remain, including breach of contract and of the implied covenant for the insured.
Third Party Claims
Policy-Limits Demands and Excess Judgments
Suppose the driver who hit you carries the minimum coverage and your injuries are worth more. For policies issued or renewed on or after January 1, 2025, the minimum is $30,000 per person and $60,000 per accident for bodily injury (Vehicle Code section 16056). You offer to settle for the limit. If the insurer unreasonably says no and a jury later awards more, the insurer can be liable for the whole judgment, including the part above the limit (Comunale).
In Crisci v. Security Ins. Co. (1967) 66 Cal.2d 425, the court framed the test as whether a prudent insurer without policy limits would have accepted the offer, and it upheld damages for the policyholder’s mental suffering. Comunale also held that the policyholder’s claim for the excess is assignable. In practice, an injured person often ends up pursuing it by assignment from the at-fault driver.
The Time-Limited Demand Rules
Since 2023, Code of Civil Procedure sections 999 to 999.5 govern pre-lawsuit demands to settle within limits under auto, motor vehicle, homeowner and commercial premises policies. The checklist shows what the demand must contain. If the insurer declines, it must explain why in writing before the deadline. When the claimant has a lawyer, a demand that does not substantially comply is not treated as a reasonable offer in a later bad faith suit.
What a Valid Demand Must Include
- Written, labelled as a time-limited demand
- At least 30 days to accept (33 by mail)
- An offer to settle all claims within limits, including liens
- A complete release for the insureds
- Date and location of the loss
- Claim number, if known
- All known injuries, with reasonable proof
Recovery
What a Bad Faith Claim Can Recover
What the policy owed, with interest where the law allows it.
Including an excess judgment against a policyholder, and emotional distress, as in Crisci.
Fees reasonably incurred to compel payment of withheld benefits can be recovered as damages (Brandt v. Superior Court (1985) 37 Cal.3d 813).
Only on clear and convincing evidence of oppression, fraud or malice (Civil Code section 3294).
Timelines
How Long Do You Have?
There is more than one clock, and the shortest one controls.
The injury claim itself. A California personal injury lawsuit generally has to be filed within two years (Code Civ. Proc. 335.1). Settlement talks do not stop that clock.
The bad faith claim. It depends on how the claim is framed. In Frazier v. Metropolitan Life Ins. Co. (1985) 169 Cal.App.3d 90, the tort claim fell under the two-year period of section 339. The contract-based claim had the four years that section 337 allows for written contracts. Many policies also contain their own shorter time limits for suing the insurer. Plan around the two-year date.
Report It to the Department of Insurance
You can file a complaint with the California Department of Insurance online at insurance.ca.gov, or call its consumer line at 1-800-927-4357. A complaint does not replace a lawsuit and does not stop any deadline.
Documents
What to Keep From the Start
A bad faith claim is built from the insurer’s own paper trail. Keep everything, and keep it dated.
Questions
Frequently Asked Questions
Can I sue the other driver’s insurance company for bad faith?
Generally not directly. The other driver’s insurer owes its duty to settle to its own policyholder, so California does not let an injured claimant sue it for bad faith in their own right. If the insurer unreasonably refused a settlement within its limits and a larger judgment followed, the policyholder’s claim against the insurer can be assigned to you.
How long does an insurer have to accept or deny a claim in California?
Under 10 CCR 2695.7(b), no more than 40 calendar days after it receives proof of claim. If it needs more time, it must tell you in writing what it still needs and why, and repeat that notice every 30 days until it decides. Once it accepts the claim, payment is generally due within 30 days.
Is a low settlement offer bad faith?
Not by itself. The regulations bar offers that are unreasonably low, looking at whether the insurer weighed your evidence and the likely result at trial. A genuine dispute over value, reached after a fair investigation, is generally not bad faith.
What is a time-limited demand?
It is a written, pre-lawsuit offer to settle an injury claim for an amount within the at-fault party’s policy limits, which must be accepted by a stated deadline. Code of Civil Procedure sections 999 to 999.5 set out what it must contain, including at least 30 days to respond, or 33 days if sent by mail.
Does filing a complaint with the Department of Insurance help?
It can prompt the insurer to respond, because the regulations require insurers to answer a Department inquiry within 21 days. It does not decide what your claim is worth and it does not stop a filing deadline. The Department’s consumer line is 1-800-927-4357.
Free Consultation
Talk to a Lawyer About Your Insurance Claim
If an insurer has stalled, denied or underpaid your injury claim, or refused a settlement within the limits, we can review the policy, the claim file you have and the deadlines that apply.
Free consultation. No attorney’s fee unless we recover for you.
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Law Offices of Burg & Brock, A Professional Law Corporation · Sherman Oaks, Los Angeles County, California
Attorney advertising. Cameron Yadidi Brock is licensed to practice law in California, State Bar #183112. This page is general information about California law, not legal advice, and reading it does not create an attorney-client relationship. Statutes, regulations and cases are summarised as of October 2026 and can change; check the current text before relying on it.
Attorney’s fees for qualifying matters are contingent on obtaining a recovery. Case costs are a separate matter from attorney’s fees, and how case costs are handled is set out in the written fee agreement, which controls the actual terms of the representation.
