Bad Faith

We contract with and pay premiums to insurance companies to be there for us when we need them, and when an insurance company acts unreasonably and refuses to pay claims or benefits or settle or defend a lawsuit, the civil trial attorneys at the Santa Barbara law firm of Pulverman & Pulverman, LLP hold them accountable for their bad faith actions.

The Covenant of Good Faith

A covenant of good faith is implied in every contract, including every insurance policy. This requirement to act in good faith means that the insurance company must act reasonably in its decisions and not for improper motives. It is not necessarily unreasonable for an insurance company to investigate a claim, determine coverage and liability, establish the value of a claim, or decide whether it is better for the company to settle or litigate. These may all be sound business practices. However, when the motive is to find a way to deny the claim or pay as little as possible, the actions of the insurance company may be in bad faith.

Examples of bad faith actions could include:

• Rescinding a policy on a technicality in order to avoid paying a claim
• Denying coverage
• Offering a "lowball" settlement figure that is out of proportion to the true value of the claim
• Refusing to settle with a third party
• Refusing to defend a claim brought by a third party
• Failing to properly investigate a claim
• Undue delay in processing a claim

Seek Experienced Legal Representation

Proving a case of bad faith includes looking objectively at the customary course of business in the industry as well as uncovering the insurance company's subjective motives in the particular instance. An insurance company's actions, if wrong, may be negligent and may be a breach of contract, but they are not necessarily in bad faith.

The attorneys at Pulverman & Pulverman, LLP represented a named party through many trials and appeals in Safeco Ins. Co. v. Parks, a seminal insurance bad faith case involving a multi-million dollar judgment and the insurance company's bad faith failure to settle a personal injury case and defend or indemnify an insured under the policy. If you feel that you are not being treated fairly by your insurance company, contact Pulverman & Pulverman, LLP for a free consultation.