How to Sue an Insurance Company for Bad Faith in California?

By Timothy Hobbs

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Insurance

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Last Modified on Apr 04, 2025

When you purchase an insurance plan, you are doing so under the assumption that you will receive what is outlined in your policy. The reason you purchase insurance is to receive financial protection in the event of some sort of disaster, such as wildfires, earthquakes, and other forms of personal tragedy, like theft. If your insurance provider refuses your claim, you may need to know how to sue an insurance company for bad faith in California.

What Is Bad Faith Insurance?

Bad faith insurance involves your insurance company using immoral, illegal, or unethical means to avoid paying you a claim that you are rightfully owed. When a natural disaster damages your house or somebody steals your car, you may have an insurance policy in place to make sure you don’t suffer a total loss. Many people who are seeking an insurance claim are doing so at a low point in their lives. A refusal of their claim may not just be illegal but cruel.

Whenever your insurance company refuses to pay out your claim, it can trigger a ripple effect that impacts other aspects of your life, particularly your financial security. You had insurance in place specifically to avoid this kind of situation. When your insurance company abandons you, you could have to pay for certain repairs out of pocket, which you may not be able to afford.

Insurance claims are not uncommon in California. Natural disasters like earthquakes, landslides, and wildfires are an unfortunate fact of life throughout the state. According to the California Department of Insurance, over $6.9 billion was paid out in insurance claims to wildfire survivors in 2024. These payments were largely expedited out of necessity. For people like wildfire survivors, facing bad faith insurance after losing everything in a fire can be absolutely devastating.

If you are dealing with bad faith insurance, it may be impacting your financial health more than you think. You may want to reach out to a financial security support group, such as United for Financial Security or Economic Security and Dignity. They may be able to help you manage a budget or adjust your spending needs as you fight in court to get your insurance claim.

Taking Legal Action for Bad Faith Insurance in California

If you would like to take legal action against your insurance company for bad faith, you may have to prepare yourself for a lengthy and unpredictable fight. Generally, you will have two years to file, as a bad faith insurance claim is largely considered a tort claim, just like a personal injury or car accident case. You will need to prove that your insurance carrier acted unreasonably and deliberately to deny your claim. Here are some steps in the process:

• Gather Evidence: Before you start filing your case, you will need to gather as much evidence as you can find that proves your insurance claim was denied unfairly or unreasonably. This evidence can include your insurance policy paperwork, correspondence with your insurance agent, and other relevant paperwork. Make sure you document everything connected to the denial of your claim.
• File a Complaint: Once you have gathered evidence and consulted with a lawyer, you should file an official complaint with the California Department of Insurance (DOI). They can investigate the dispute on your behalf. They may try to resolve your situation through mediation in order to avoid litigation. If that’s not possible, legal action will be next.
• Prepare a Case: If the DOI is unable to resolve things, you should file a case with the civil court. Your lawyer can help you prepare the proper paperwork and make sure you don’t miss any crucial filing deadlines. These cases can get complex, so you should hire an experienced Bad Faith Insurance lawyer you can rely on.

FAQs

Q: What Is a Bad Faith Claim Against an Insurance Company in California?

A: A bad faith claim against an insurance company in California occurs when your insurance company acts unfairly, dishonestly, or illegally in order to avoid paying you. They may be breaching your insurance contract or trying to undervalue your policy altogether. Regardless, the outcome is a refusal to pay you what you are owed as per your policy. See a lawyer to learn what your options are.

Q: Is It Worth Taking Legal Action Against an Insurance Company?

A: There is no good answer to the question of whether taking legal action against an insurance company is worthwhile. Ultimately, you have to decide for yourself if taking legal action against your insurance company is worth it. These cases can be drawn out, complicated, tiring, and unpredictable. However, victory assures your insurance carrier is held accountable for trying to take advantage of you, and you may receive a potentially significant sum in damages. In the end, it’s your choice to make.

Q: How Much Is a Bad Faith Claim Worth?

A: There is no telling how much a bad faith claim may be worth. Every bad faith insurance case is different, with its own details and contributing factors that will influence the settlement amount. These contributing factors may include the initial claim amount you tried to receive, the actions the insurance company took to deny that claim, and the resulting damages the court feels you are owed.

Q: What Are Three Ways in Which an Insurer Can Be Liable for Bad Faith?

A: There are many different ways that an insurer can be liable for a bad faith claim:

• If your insurance company denies your claim outright with no reason and no investigation, they are likely acting in bad faith.
• If your insurer is taking an unreasonably long amount of time to process your claim, it may be a sign of bad faith.
• If, after processing your claim, you receive a low offer that does not match your policy, it can be a sign of bad faith.

Contact Hobbs Law Group Today

The legal team at Hobbs Law Group understands how infuriating and unfair it can feel to have your insurance claim denied when you rightfully deserve reimbursement. If it happens to you, you should attempt to exhaust all possible avenues to get what you are owed as per your policy. The last thing you should have to worry about after suffering from a traumatic event is being denied the financial compensation you were expecting from your insurance company.

At Hobbs Law Group, we can help you take action against a bad faith insurance claim. Contact us to speak to someone about your case.