There are California Regulations (including the Fair Claims Settlement Practices Regulations at Title 10, Chapter 5, subchapter 7.5), statutes (including Insurance Code section 790.03(h)), and case law that provide guidelines and minimum standards insurance companies must comply with in the handling of insurance claims.

If you would like a copy of the Regulations or portions of the Insurance Code, contact our office and we will be happy to send you a copy for free. Contact us at gkk@vklawyers.com or (800) 663-1095.

An overview of those guidelines and minimum standards is discussed at our December 1, 2010 Insurance Bad Faith Blog. Be aware of these guidelines and standards!

This Blog discusses some of the most important ways insurance companies fail or refuse to properly handle and adjust your first party claim, and what you should do if you believe or suspect that your insurance company is not adhering to applicable guidelines and standards in the handling of your claim.

This includes if the carrier is:

• Delaying the proper handling of your claim
• Undervaluing your losses/claim
• Improperly denying your claim

In a three-part Blog series, we will discuss what you should do if you suspect your insurance company is: (1) delaying the proper handling of your claim; (2) improperly underestimating your loss or the true value of your claim; and/or (3) improperly denying coverage for your claim – either by an outright denial, or by refusing to handle and adjust your valid covered claim.

One of the promises we are purchasing is the insurance company’s pledge that it will promptly pay our valid insurance claims.

As Judge McDaniel stated in the case of Austero v. National Cas. Co. of Detroit, Michigan (1978) 84 Cal.App.3d 1, in a first party case, an insurer’s wrongful denial of coverage has particular far reaching consequences:

     “As correctly reflected by the jury instruction quoted, it is now firmly established that every policy of insurance imports an implied covenant of good faith and fair dealing which enjoins upon each party to the agreement a duty that neither shall do anything which impairs the right of the other to receive the benefit of agreement. (Liberty Mut. Ins. Co. v. Altfillisch Constr. Co., 70 Cal.App. 3d 789, 797.). . .

     “In the usual first party case the promise of the insurer to pay money, due under the policy, to the insured upon the happening of the event, the risk of which has been insured against. The benefit contracted for by the insured is the availability of money promptly upon the happening of the event insured against, and when an insurer refuses unreasonably to make a payment of the benefits due under the terms of the policy, it deprives the insured of the essential benefit of the agreement.

     “This follows, for the insured bargained for prompt payment, not a right of action against the insurer.” (Emphasis in original and added.)

Note: Austero was overruled in Egan v. Mut. of Omaha Ins. Co. (1979) 24 Cal.3d 809 on the issue of compensatory damages under California Civil Code section 3333 – the Court in Egan held that the jury could include in the compensatory damage award future policy benefits the policyholder would have been entitled to receive had the contract been honored by the insurer.

In an attempt to ensure that insurance companies honor their promise that they will promptly handle your claim, the California Regulations, section 2695.7(b), mandates that insurance companies:

“[S]hall immediately, but in no event more than forty (40) calendar days [after receiving proof of claim] accept or deny the claim, in whole or in part. . . .

Most insureds do not realize that insurance companies must accept or deny their claim within 40 days from the date of proof of loss. Note: This Regulation applies to policies, including homeowner and auto policies, issued in this state. The Regulations do not apply to workers’ compensation policies, certain health care provider liability policies, some disability income insurance, etc. Give us a call if you are not sure whether your policy is subject to the California Fair Claims Practices Settlement Regulations.

If the insurance company requires additional time (i.e., more than 40 calendar days) to determine whether a claim should be accepted and/or denied in whole or in part, the insurance company:

“[S]hall provide the claimant. . . with written notice of the need for additional time. This written notice shall specify any additional information the insurer requires in order to make a determination and state any continuing reasons for the insurer’s inability to make a determination. Thereafter, the written notice shall be provided every thirty (30) calendar days until a determination is made. . . .”

Did you also know that when an insurance company (its adjuster) receives any communication from an insured regarding a claim that reasonably suggests that the insured expects a response, the insurance company must immediately, but in no event more than 15 calendar days provide a complete response to the insured.

Section 2695.5(b) of the Regulations states:

“Upon receiving any communication from a claimant, regarding a claim, that reasonably suggests that a response is expected, every licensee shall immediately, but in no event more than fifteen (15) calendar days after receipt of that communication, furnish the claimant with a complete response based on the facts as then known by the licensee. . . .”

If your insurance company improperly fails or refuses to pay your valid, covered claim within at least 40 days from the date you have reasonably substantiated the value of your loss, your insurance company may be engaging in insurance breach and bad faith.

If your insurance company improperly fails or refuses to explain to you: (a) why it has not yet paid your valid, covered claim; or (b) what additional information your insurance company requires, it may be engaging in insurance breach and bad faith.

If you have called or written to your insurance company seeking information and a response regarding your claim, and your insurance company improperly fails or refuses to respond immediately or at least no more than 15 days after your call or letter, it may be engaging in insurance breach and bad faith.

Most importantly, if there are improper delays in the handling, adjustment, and payment of your valid and proper claim, you and your loved ones are most likely suffering.

You are not being provided with one of the very most important promises your insurance company made to you when you paid your policy premiums: “the availability of money promptly upon the happening of the event insured against. . . .”

Write to your adjuster, or your insurance company, and tell them that they are engaging in delay that is harming you, any other insureds under the policy, and family members affected by the improper delay. Your letter does not have to be fancy or complicated; you can even hand write the letter. Just make sure you have a copy of the letter you send.

You can e-mail your adjuster, or other involved insurance company personnel. Print out your e-mail, and keep a record that you sent the electronic communication.

If you speak with your adjuster or other insurance company personnel in person or over the telephone, always write down whom you spoke with, the date, time, and what was discussed. Follow that oral communication up with a letter, or an e-mail.

If you are experiencing claim handling problems, such as improper delays, get the name of your adjuster’s supervisor or claim manager. Write or e-mail the supervisor, and let that person know of the problems you are having.

Another thing you should not do is give up! In some circumstances, this is exactly what the insurance company is trying to achieve – particularly in these difficult economic times, many insureds are simply giving up and giving in.

Do not give up and give in to abusive insurance company tactics. You have recourse; there is help.

Many people do not realize that they can hire a lawyer on a contingency basis. If you have a valid, covered claim, and the insurance company is unreasonably handling your claim (including by improper delay), we may be able to help! We take our cases on a contingency basis – which means that we front the costs, and we do not recover unless we are able to prevail. We do not charge by the hour.

This leads us to comment about so-called “frivolous lawsuits.”

Most lawyers who take contingency fee cases do not take “frivolous lawsuits.”

Contingency lawyers take cases they believe are valid and have merit. This is because we actually invest our own funds, time, and effort in contingency cases.

So, if you believe or suspect that your insurance company is improperly or unreasonably handling your valid, covered claim, don’t give up, and don’t give in. Contact us at gkk@vklawyers.com, or give us a call at (800) 663-1095.

Be Aware!

Be careful when completing Life Insurance Policy applications!  This is vitally important. 

Did you know:  Some insurance companies instruct their agents: (1) to ask the application questions, and insert the answers themselves; and then (2) not to release the application except to have the prospective insured sign the application. 

This leads to potential confusion, only to allow the insurance company to later claim that the application response was erroenous, and that the insurance company therefore could refuse to honor the promises in the Life Insurance Policy. 

If your Life Insurance Company denies coverage – you may have important recourse.  You can fight Life Insurance Companies’ wrongful coverage denials!

A Sampling Of California Case Law Regarding Life Insurance Policy Issues: 

In Thompson v. Occidental Life Insurance Company of Calif. (1973) 9 Cal.3d 904, the husband/insured purchased a life policy naming his wife as the beneficiary. After the husband’s accidental death, the life insurance company denied coverage and returned the policy premium.

Defendant Occidental claimed, among other things, that the husband had made a material misrepresentation on the application, because he did not reveal various medical consultations regarding leg vain inflammation and leg pain, which included 10 medical consultations with five different doctors. Defendant Occidental further claimed that if the husband had revealed this information, it would not have issued the policy.

The trial court awarded judgment to the plaintiff/beneficiary wife against Occidental. The California Supreme Court affirmed the award in favor of the wife. In affirming the award in favor of the plaintiff/wife, the Court first discussed the general rules regarding life insurance applications and misrepresentations:

● An insurance company has a right to know all of the information that the applicant for insurance knows regarding the state of his health and medical history.

● Material misrepresentation or concealment of such facts are grounds for rescission of the policy – actual intent by the insured to misrepresent need not be shown.

● There is a presumption that if there is a question on a life insurance application, the information sought is in fact material. If the insurance company would not have issued the policy had the insured truthfully provided all of the information requested, then the information is considered material.

● If the insured is given the application to sign, it is the insured’s responsibility to ensure that the information is correct. Where the insured is given the application as part of the policy, it is the insured’s responsibility to read the application. If there are any incorrect answers, the insured must notify the insurance company.

However, with the above foundational principles in mind, the Court continued:

The burden is on the insurance company to prove misrepresentation.

The insurance company bears the burden of negating an insured’s plausible misrepresentation defenses.

Plausible misrepresentation defenses, the Court reasoned, may include:

● The agent failed to record the information correctly. The agent intentionally or inadvertently did not record the proper information (which implies an agent’s intentional or inadvertent failure to properly ask the pertinent questions).

● The insured provided the agent with the information, but was informed that the information was not important. And, the agent fails to include the information in the application.

● The insured may have been led to believe, or did honestly believe, that the undisclosed information was not material to his overall health issues.

Furthermore, the Court in Thompson v. Occidental Life Insurance Company of Calif., supra, affirmed the award in favor of the plaintiff/wife, despite the fact that the insured had the obligation to read the application, and had signed the application stating that he had read the application.

The Court held that because the examining doctor taking the information gave the impression that the insured’s review of the application, or provision of additional information, were unnecessary, there was no showing of an affirmative misrepresentation.

With respect to which party bears the burden of explaining the alleged application misrepresentations, the California Supreme Court stated:

“[U]nder the authorities, the burden of proving misrepresentation rests upon the insurer. (See, Farmers Auto., etc. Exch. v. Calkins 39 Cal.App.2d 390, 393; Mayfield v. Fidelity & Casualty Co. 16 Cal.App.2d 611; Evid. C. § 520.). . . Thus, the burden was on Occidental to negate to the satisfaction of the trier of fact the various plausible explanations for the incomplete answers on Thompson’s application.”

See, Thompson v. Occidental Life Insurance Company of Calif., supra, 9 Cal.3d at 919.

Lastly, an Occidental officer testified that the carrier would not have issued the policy if the true information had been disclosed. However, the trial court was entitled to disregard the evidence because of the witness’ potential bias, and his demeanor or manner of testifying.

Importantly, the person taking down the application information in Thompson was a medical care provider – the insured only signed the application (as here). The Court found that the medical care provider’s alleged omissions were chargeable to the insurance company – resulting in coverage.

In Rutherford v. The Prudential Ins. Co. of America (1965) 234 Cal.App.2d 719, the Court again found in favor of the plaintiff/beneficiary wife where the life insurance company had withheld policy benefits based on alleged misrepresentations on the life insurance application.

The Court concluded that the facts supported a finding that the insured had been as truthful as possible when the application was completed, and that any omissions were the result of the examining physician’s carelessness.

The Court further found that the fact that the insured had signed an authorization releasing all of his medical information and records supported the finding that the insured had a good faith belief in the accuracy of the information on the application.

The Court additionally deemed significant the physician’s testimony that “he was not interested too much in detail,” and if an insured mentioned a fact he believed unimportant, he would not include the information on the application.

In Rutherford, the Court gave weight to the fact that the physician’s entire examination of applicants “customarily takes about 25 minutes, the physical examination occupying less than one-half of that time.”

Often – prospective insured’s application process takes about 15 minutes.

As in Thompson v. Occidental, the Court in Rutherford concluded that there was sufficient evidence that the insured believed he was providing truthful answers to the questions posed.

In Boggio v. California-Western States Life Ins. Co. (1951) 108 Cal.App.2d 597, the Court again held in favor of the plaintiff/beneficiary wife in this case, because the agent informed the insured that he did not need to disclose certain information on the application. Here, the insured specifically told the agent about the omitted information (medical incident while in military service). However, the agent informed the insured that because he had an honorable discharge, the insured did not need to reveal that medical event. The insurance company later denied policy benefits based on material misrepresentation.

The Court concluded that because it was the agent who caused the information to be omitted, there was coverage. The misconduct was chargeable to the insurance company – not the insured. Importantly, the Court noted as “essential to explain the judgment” in favor of the plaintiff/beneficiary wife, the fact that:

“The insurance was sold by Louis P. Angelino who had been an agent of defendant for 25 years. Angelino had known the Boggio family for 12 years, had handled all of their insurance needs, and they had faith and confidence in him. As a friend of the family he was fully acquainted with Robert’s naval hospitalization. The application was entirely in the handwriting of Angelino – - only the signature being written by Robert. . . .”

In Scroggs v. Northwestern Mut. Life Ins. Corp. (1959) 176 Cal.App.2d 300, 303, plaintiff widow filed suit because the life insurance company’s refused to pay benefits due to alleged application misrepresentations. The Court of Appeal affirmed the trial court’s judgment in favor of the plaintiff widow.

The application inquired whether the husband had been treated by a physician within the last five years. The husband responded “no.” After the policy was issued, the husband died from thrombosis. It was discovered that three years before he completed the application, the husband had been seen by his doctor.

The Court found that the alleged misrepresentation was not material. More importantly, the husband had stated on the application in the next line the name and address of his treating physician. This, the Court reasoned, demonstrated a lack of intent to mislead or conceal.

Be aware!  Different states place different burdens on the insurance company versus the insured in negating the insurance company’s refusal to pay the claim because of purported application misrepresentation. The discussion above sets forth California law.

If your Life Insurance company denies your claim because of alleged misrepresentations in the Life Policy application – you may still have recourse, and may still be entitled to receive the Life Insurance Policy benefits.  If you have questions, or for more information, give us a call at (800) 663-1095, or contact us at www.vklawyers.com – we are here to help. 

The following may constitute insurance company bad faith:

1.  An insurance company’s misrepresentation of pertinent facts in letters to the insured may constitute a violation of the California Regulations, Title 10, Chapter 5, subchapter 7.5 (“Regulations”), section 2695.7(b)(1) and Insurance Code sections 790.03(h)(1), (13).

2.  The Regulations require that an insurer accept or deny a claim within forty days.  If the carrier requires additional information, it must specify the information needed, and provide written notice to the insured every thirty days regarding status of the claim.  An insurance company’s failure to do so, particularly as part of a pattern and practice, may constitute bad faith.  See, Regulations, sections 2695.7(b), (c)(1), (d), and Insurance Code sections 790.03(h)(2), (4), (5).

3.  An insurance company must conduct a fair, objective, or thorough investigation.  Its failure to do so may violate the Regulations, section 2695.7(d), and also may constitute insurance company bad faith.

4.  An insurance company’s persistence in seeking information not reasonably required for or material to the handling of an insured’s claim may constitute bad faith.  See, Regulations, section 2695.7(d) as well as Insurance Code sections 790.03(h)(4) and (5).

5.  An insurance company that forces its insured to file a lawsuit to obtain policy benefits to which the insured was and is entitled violates the Insurance Code section 790.03(h)(6).

6.  An insurance company’s unreasonably requiring an insured – or non-insureds - to submit to numerous and repetitive recorded statements, and Examinations Under Oath, and may constitute carrier bad faith.  See, Regulations, section 2695.7(d).

Some insurance company conduct that may demonstrate insurance company bad faith:

In Twaite v. Allstate Ins. Co. (1989) 216 Cal.App.3d 239, 256 – 257, the Court measured the conduct of the insurance company to section 790.03 in determining whether there was a breach of the implied covenant.  A breach of that Code section may be evidence of “bad faith.”

Insurance Code section 790.03 has been held to be “a codification of the tort of breach of the implied covenant of good faith and fair dealing as applied to insurance.”  See, Kelly v. General Ins. Exchange (1987) 194 Cal.App.3d 1, 6.

Importantly, the Insurance Code section 790.03 provisions are the “factors” for a jury “to consider in evaluating” an insurance company’s conduct – and whether the insurance company acted in bad faith.  See, CACI 2337.

Similarly, a violation of the Regulations is evidence of bad faith, and an insurer can be estopped from denying coverage for violations of the Regulations.  See, e.g., Spray, Gould and Bowers v. Associated International Ins. Co. (1999) 71 Cal.App.4 1260.

In a first party case, such as a homeowner or automobile lawsuit, the gravamen of tortious insurer conduct is the insurance company’s unreasonable withholding of benefits.  The implied covenant enjoins the insurer from doing anything to impair the insured’s right to receive the benefits for which the insured contracts.  See, Egan v. Mutual of Omaha Ins. Co. (1979) 24 Cal.3d 809, 818 – 819.

As the Court stated in Austero v. National Cas. Co. of Detroit, Michigan (1978) 84 Cal.App.3d 1, in a first party case, an insurer’s wrongful denial of coverage has particular far reaching consequences:

“As correctly reflected by the jury instruction quoted, it is now firmly established that every policy of insurance imports an implied covenant of good faith and fair dealing which enjoins upon each party to the agreement a duty that neither shall do anything which impairs the right of the other to receive the benefit of agreement.  (Liberty Mut. Ins. Co. v. Altfillisch Constr. Co., 70 Cal.App. 3d 789, 797.). . .

“In the usual first party case the promise of the insurer to pay money, due under the policy, to the insured upon the happening of the event, the risk of which has been insured against.  The benefit contracted for by the insured is the availability of money promptly upon the happening of the event insured against, and when an insurer refuses unreasonably to make a payment of the benefits due under the terms of the policy, it deprives the insured of the essential benefit of the agreement.

“This follows, for the insured bargained for prompt payment, not a right of action against the insurer.”  (Emphasis in original and added.)

See, Austero v. National Cas. Co. of Detroit, Michigan, supra, 84 Cal.App.3d at 48-49, and 57-58 (disapproved on other grounds in Egan v. Mutual of Omaha Ins. Co., supra).

An insurance company’s unreasonable refusal to pay a covered claim, based on insupportable distortions of the facts, may demonstrate an unreasonable withholding of policy benefits and consequent breach of the implied covenant.  See, Neal v. Farmers Ins. Exchg., supra; Gruenberg v. Aetna Ins. Co. (1973) 24 Cal.3d 809, 824.

The Courts acknowledge that the term “bad faith” is an “imprecise label for what is essentially some kind of unreasonable insurer conduct.”  See, Austero v. National Cas. Co., supra, 84 Cal.App.3d at 26.  Nevertheless, the Courts and the Legislature have found the following to constitute bad faith:

●   The insurer’s failure to fully investigate facts demonstrating coverage:

“For the insurer to fulfill its obligation not to impair the right of the insured to receive the benefits of the agreement. . . it is essential that an insurer fully inquire into possible bases that might support the insured’s claim.” (See, Egan v. Mutual of Omaha, supra, 24 Cal.3d at 819.)

 ●  Failure to fully investigate further violates Insurance Code section 790.03(h)(3), and the Regulations, section 2695.7(b), (c).  See also, BAJI 12.92, 12.93, 12.94; Shade Foods, Inc. v. Innovative Products Sales & Marketing, Inc. (2000) 78 Cal.App.4th 847, 879 (adequacy of investigation is “[a]mong the most critical factors bearing on the insurer’s good faith”).

●  The insurer’s failure to evaluate a claim “objectively.”  See, Hughes v. Blue Cross of No. Calif. (1989) 215 Cal.App.3d 832, 845 – 846; Shade Foods, Inc. v. Innovative Products Sales & Marketing, Inc., supra, 78 Cal.App.4th at 880.

●  The insurer’s arbitrary or capricious interpretation of its policy or the facts.  See, Moore v. American United Life Ins. Co. (1984) 150 Cal.App.3d 610, 621; Beck v. State Farm Mut. Auto. Ins. Co. (1976) 54 Cal.App.3d 347, 354 – 355.

●  The insurer’s engaging in deceptive or unfair practices to avoid paying a claim – such as through unreasonable conduct regarding an Examination Under Oath, or a misleading response/denial letter.  See, Delos v. Farmers Ins. Group, Inc. (1979) 93 Cal.App.3d 642, 664.

●  The insurer’s wrongfully accusing an insured of having committed a crime he or she did not commit.  See, Gruenberg v. Aetna Ins. Co. (1973) 9 Cal.3d 566, 575; Mustachio v. Ohio Farmers Ins. Co. (1975) 44 Cal.App.3d 358, 362.

It is instructive that the California courts have upheld a finding of breach of the implied covenant – as well as the imposition of punitive damages – in first party cases for conduct as outlined above:

In Neal v. Farmers Ins. Exchg. (1978) 21 Cal.3d 910, 923, the California Supreme Court held that the withholding of policy benefits resulting from delay and a failure to thoroughly investigate the claim constitutes breach of the implied covenant.  The Court affirmed the finding of bad faith, and the punitive damage award against Farmers, stating in part:

“We are satisfied that an award of punitive damages was here proper. There was substantial evidence before the jury from which it might reasonably have been concluded that defendant Farmers here acted maliciously, with an intent to oppress, and in conscious disregard of the rights of the insured. That evidence, in brief, indicated. . . a conscious course of conduct, firmly grounded in established company policy, designed to utilize the [insured’s] lamentable circumstances. . . And the exigent financial situation resulting from it, as a lever to force a settlement more favorable to the company than the facts would otherwise have warranted.”

See, Neal v. Farmers Ins. Exchg., supra, 21 Cal.3d at 922 – 923.

Further, an unreasonable delay in the processing or payment of a claim will support an implied covenant breach claim, and punitive damages.  See, Fleming v. Safeco Ins. Co. (1984) 160 Cal.App.3d 31, 37; Neal v. Farmers Ins. Exchg., supra, 21 Cal.3d at 922 – 923.

In addition, abusive tactics and threats of charging the insured with a crime, to avoid the payment of a claim, subjects an insurer to punitive damages.  See, Rios v. Allstate Ins. Co. (1977) 68 Cal.App.3d 811, 817; Downey Savings and Loan Ass’n v. Ohio Cas. Ins. Co., supra, 189 Cal.App.3d at 1091.

An insurance company is required to make reasonable efforts to keep the insured informed as to the status of the claim.  The insured pays the premium for peace of mind.  That peace of mind for which the insured bargains when buying the policy is jeopardized when the insurance company ignores the insured.  See, Delgado v. Heritage Life Ins. Co. (1984) 157 Cal.App.3d 262, 278.

As the Court stated in Mariscal v. Old Republic Life Ins. Co. (1996) 42 Cal.App.4th 1617:

“Insureds seek protection against calamity and purchase insurance to buy peace of mind and security. (Egan v. Mutual of Omaha Ins. Co. . .) The insurer has a duty to protect the insured’s interests as if it were its own, and it may not deny a claim without thoroughly investigating it.  (Id.)

“A trier of fact may find that an insurer acted unreasonably if the insurer ignores evidence available to it which supports the claim.  The insurer may not just focus on those facts which justify denial of the claim. If an insurer unreasonably refuses a claim, it is liable for breach of the covenant of good faith and fair dealing inherent in every policy.  (Neal v. Farmers Ins. Exchg. . . McCormick v. Sentinel Life Ins. Co. . .)

“An insurer must liberally construe claim forms and the policy in favor of coverage; exclusions are strictly interpreted against the insurer.  (Delgado v. Heritage Life Ins. Co. . .).”

We Can Help

If you have made an insurance claim, and you believe that your insurance company is acting in bad faith, we can help you.  Give us a call.  We conduct initial consultations, and review your documents to determine whether we can help you, free of charge. 

Contact us at: (800) 663-1095 toll free, or (213) 225-5855.  You may also go to our contact page at www.vklawyers.com.

Did you know – if you suffer a loss to your home, under the California Regulations, Title 10, Chapter 5, subchapter 7.5, section 2695.9 provides that:

• No insurance company shall require that the insured have the property repaired by a specific person or entity. Section 2695.9(b)
• No insurance company shall even suggest or recommend that the insured have the property repaired by a specific person or entity unless (a) the insured specifically requests such a referral or (b) the insured is informed in writing of his or her right to have his or her own contractor. If the insured accepts the insurance company’s suggestion or recommendation, “the insurer shall cause the damaged property to be restored to no less than its condition prior to the loss and repaired in a manner which meets accepted trade standards for good and workmanlike construction at no additional cost” to the insured. Section 2695.9(c)
• If the insurance company provides a repair estimate that is lower than the estimate prepared by the insured’s contractor’s estimate the insurance company MUST:
  Pay the difference between the insurance company’s estimate and a higher estimate obtained by the insured OR
  “Reasonably adjust any written estimate prepared by the repair individual or entity of the insured’s choice and provide a copy of the adjusted estimate to the claimant [insured].”  Section 2695.9(d)(1) and (3)

What Does This Mean To Insureds And To Contractors?

Insureds:

You, the homeowner insured, are entitled to use the general contractor of your choice.  Why is it important that you be entitled to use the general contractor of your choice?  Because the insurance company “preferred contractors” often submit incomplete or low estimates ‑ that is how they become that insurance company’s “preferred contractors.”  You need to be able to have your home repaired by a contractor you trust, and who will repair your home in a good workmanlike manner.

If you the insured use the insurance company’s contractor, you are responsible for any problems or failures during the restoration process.  The restoration and repair contract is between you, the insured, and the contractor ‑ not the insurance company and the contractor.  That is the policy reason why the Regulations require that insureds be allowed to use the contractor of your choice.

Contractors:

Honest, reputable contractors who are not willing to play the insurance company’s “game” are penalized ‑ they are driven out of business because they cannot compete.  Such contractors often are slandered, and are put out of business.  These contractors are not allowed to compete.  The insurance companies mislead their policyholders into believing that they must select the insurance company’s contractors.  This is not so, as demonstrated by the Regulations, above.

Insurance companies select contractors based on their low cost repair valuations ‑ typically not because of the good quality of their work.

We personally know general contractors who have been put out of business because they provide honest estimates, and more complete scopes, than the insurance company’s “preferred contractors.”

Why Should Insureds Care About What Happens To Independent General Contractors?

Insureds need to have contractors who are not held captive by insurance companies, and their cost containment priorities, to provide honest, reliable restoration and repair scopes and estimates.

If the only contractors that existed were insurance company “preferred contractors,” restoration and repair scopes and estimates would be “low ball,” missing necessary items, and undervalued.  Insureds could not get their homes repaired properly and thoroughly.

Don’t let insurance companies railroad you into using their restoration and repair contractor!  You are entitled to use the contractor of your choice.

Don’t let insurance companies put the honest, hard working contractors ‑ who are not willing to be held hostage by the insurance industry ‑ out of business!

We have to wake up now to these types of insurance company abuses!  Be aware!

It is in your, your children’s, your grandchildren’s, your parents’, your friends’, your neighbors, and everyone’s best interests to not let these abuses go unnoticed, and unaddressed.

Please visit our website at California Insurance Lawyers (vklawyers.com) for more information.

Call us toll free at (800) 663‑1095 or at (213) 225‑5855.

We give advice free of charge ‑ we are here to help.

Gary K. Kwasniewski and Jeanette L. Viau

We’d like to hear from you!

Partners at Viau & Kwasniewski, Lawyers