Source: http://www.insurancelawexperts.com/primer/bad-faith/
Timestamp: 2019-04-24 10:40:09+00:00

Document:
A: “Unreasonable conduct” by the carrier. (California Shoppers v. Royal Globe Ins. Co. (1985) 175 Cal.App.3d 1, 221 Cal.Rptr. 171.) Examples of unreasonable behavior include denial of benefits (McLaughlin v. Connecticut General Life Ins. Co. (N.D.Cal. (1983) 565 F.Supp. 434), paying less than what is owed (Egan v. Mutual of Omaha Ins. Co. (1979) 24 Cal.3d 809, 157 Cal. Rptr. 482), and delaying payments (Beck v. State Farm Mut. Auto Ins. Co. (1976) 54 Cal.App.3d 347, 126 Cal.Rptr. 602.) For example, if a carrier in San Jose denies a claim without warrant or a reasonable explanation, or denies a claim in full by underpaying, this could be construed as an instance of San Jose insurance bad faith. Also, if there is a dispute over what is covered by a policy, it could be construed as bad faith if an insurer fails to disclose policy limits. Issues may also arise under ERISA, the federal program which regulates employee benefit and pension plans. Insurers operating under ERISA are often immune to many bad faith actions and subsequent disputes must be handled in federal court, making them much more complicated.
However, there is no exhaustive list of acts constituting bad faith. Any act breaching the implied covenant of good faith and fair dealing will give rise to a bad faith cause of action.
Q: Does the filing of a San Jose insurance lawsuit by an insured terminate the carrier’s duty of good faith and fair dealing for that particular claim in controversy?
A: Yes, if, (1) the language of the application is clear and unambiguous; (2) no modifications in the application were made by an agent of the carrier; (3) the applicant had present knowledge of the facts sought, and appreciated their significance; (4) the insured intentionally misrepresented or concealed the facts; and (5) the misrepresentation was a material one. The burden of proving misrepresentation lies with the insurer and according to some cases must be proven by clear and convincing evidence. (Thompson v. Occidental Life Ins. Co. (1973) 9 Cal.3d 904, 109 Cal.Rptr. 473.) Consult one of our San Jose bad faith insurance lawyers if you need more specific information on this topic.
A: Yes. Even though California no longer allows a “direct” cause of action by a consumer for violation of the statute (Moradi-Shalal v. Fireman’s Fund Ins. Cos. (1988) 46 Cal.3d 287, 250 Cal.Rptr. 116.), the statute still sets a “standard of care” for insurers. It is also arguable that a “negligence per se” cause of action can be pled in California. It applies whenever there is a violation of a statute intended to protect a class of persons (which includes the plaintiff) and where the damage suffered is of the type which the statute is designed to prevent. (Evid. Code section 669, Vesely v. Sager (1971) 5 Cal.3d 153, 95 Cal.Rptr. 623.) Contact our San Jose bad faith insurance attorneys for additional information regarding the Unfair Claims Practices Act.

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