Wildfires are a major public safety issue in California. They are also a leading cause of large insurance claims. The recent wildfires destroyed entire communities and displaced thousands. As property owners take stock of the damage and start thinking about the future, they may need to navigate a complex insurance claim.
They need insurance funds to rebuild or repair their homes and replace their personal possessions. Unfortunately, insurance companies have a poor track record of providing generous support after large-scale destruction. Frequently, the opposite occurs. Insurance companies desperately try to limit what they pay when many people need support at once. Bad faith insurance practices may complicate the claims process for thousands of displaced individuals.
What types of potentially actionable conduct might leave policyholders without the support they deserve from an insurance company?
Delays or stonewalling
Insurance companies have an obligation to respond to claims in a timely manner. If they need to investigate a claim, that also requires prompt action. Insurance providers may try to drag out the claims process for months in the hopes of people giving up. Other times, insurance adjusters may simply stop responding. Stonewalling or refusing to negotiate is a common tactic that can cross the line and constitute bad faith insurance practices if it unfairly deprives a policyholder of the coverage for which they previously paid.
Unfair claim denials
Insurance companies frequently look for any minuscule excuse to deny a claim. They may also try to find minor issues that justify significantly limiting the compensation provided to the policyholder. Insurance statutes require that companies uphold their policies by paying out appropriate claims in good faith. Denying valid claims and looking for questionable excuses for doing so is a common bad faith practice that leaves consumers who have paid thousands for coverage without the support they deserve.
Offering unreasonably low settlements
Settling a claim is often beneficial for the insurance company. Instead of continually making small distributions as expenses arise, they agree on one lump-sum payment amount. Typically, that amount is well below the policy limits and may also be far less than the total amount of the losses sustained. Even if the settlement is low and the policyholder has tens of thousands of dollars in additional coverage, the insurance company usually eliminates its ongoing liability in a settlement scenario.
Individuals navigating large insurance claims have the right to secure legal representation. Given the likelihood of bad faith insurance practices occurring during the rebuilding process after the recent wildfires, homeowners may be in particular need help as they negotiate their insurance claims. Securing professional advocacy can help people counter bad faith insurance practices and hold companies accountable for their refusal to honor the terms of their policies.