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Insurance agencies must investigate, indemnify and defend

On Behalf of | Feb 22, 2023 | Dealing with Insurance Companies |

If a motor vehicle collision occurs on a California highway, numerous entities may become involved in the aftermath of the incident. Any occupant of a vehicle that was hit may need immediate medical attention, which rescue workers can begin to provide, although a more complete examination can be performed at a hospital. In addition to rescue workers, police officers and insurance agencies may each have a role in assisting those involved in a car accident.  

Many recovering accident victims have encountered legal problems because of bad-faith insurance representatives, meaning that an insurance company failed in its duties. An insurance agency typically has three duties, which include investigating a claim and documenting its findings, as well as indemnification, which means paying a settlement or judgment rendered against a policyholder, up to the limits of the policy. An insurance company is also typically obligated to defend a policyholder against a claim.  

Failure to perform these duties may constitute bad faith 

If a policyholder believes that an insurance agency has acted in bad faith, meaning that it failed to carry out its duty to investigate, indemnify or defend, he or she may file a legal claim for breach of contract. In some states, including California, a victim of bad faith insurance may also file a tort claim to seek punitive damages against a company that unlawfully denied payment of a claim. If an insurance agency willfully or unreasonably denies benefits under a valid claim, there may be grounds for a lawsuit.  

Seeking justice regarding bad faith insurance 

Anyone in California who has been involved in a collision and believes that an insurance agency has acted in bad faith may request a meeting with an experienced attorney to discuss available legal options. An attorney can draft a demand letter, informing an insurance agency that a lawsuit will be filed in a certain amount of time unless a reasonable settlement is reached. If the agency fails to respond within the stated amount of time, an attorney can help the client pursue legal recourse.