California guide for demanding a proper, thorough, and unbiased claim investigation
40 Days
Max Time to Accept/Deny Claim
CCR 2695.7
Fair Claims Settlement Regs
Bad Faith
Basis for Punitive Damages
When to Use This Guide
Use this guide if your insurance company has:
Failed to interview key witnesses - Adjuster didn't contact witnesses you identified
Ignored evidence you provided - Photos, documents, or expert reports were not considered
Conducted a biased investigation - Adjuster seemed to have a predetermined conclusion
Failed to obtain necessary records - Didn't get police reports, medical records, or other documentation
Relied solely on their own experts - Refused to consider your experts or independent evidence
Made decisions without complete information - Denied or undervalued claim before investigation was complete
Delayed the investigation unreasonably - Investigation has stalled or taken far too long
What You Can Demand
Complete re-investigation - Thorough and unbiased review of your claim
Witness interviews - Contact all witnesses you have identified
Evidence consideration - Proper review of all documentation you submitted
Written explanation - Detailed response addressing all evidence
Fair claim payment - Full value of your covered losses
Signs of Bad Faith Investigation
Adjuster didn't visit the loss site or inspect the damage
Investigation focused only on reasons to deny the claim
Your evidence was dismissed without explanation
Adjuster used biased or unqualified "experts"
Claim was denied based on speculation, not facts
Important witnesses were never contacted
Investigation concluded before you finished providing information
California's Strict Investigation Standards
Under California's Fair Claims Settlement Practices Regulations (CCR Title 10, Section 2695.7), insurers must:
Conduct a thorough and objective investigation
Accept or deny claims within 40 days of proof of claim
Provide written explanation for any denial
Not require duplicate documentation
Not persist in seeking information not reasonably required
Legal Basis
California statutes and regulations requiring proper claim investigations
California Insurance Code - Unfair Claims Practices
Cal. Ins. Code Section 790.03(h)
The Unfair Claims Settlement Practices Act. Prohibits unfair methods of competition and unfair or deceptive practices in the business of insurance, including specific claim handling violations.
Cal. Ins. Code Section 790.03(h)(3)
Failing to adopt and implement reasonable standards for the prompt investigation and processing of claims arising under insurance policies.
Cal. Ins. Code Section 790.03(h)(5)
Not attempting in good faith to effectuate prompt, fair, and equitable settlements of claims in which liability has become reasonably clear.
Fair Claims Settlement Practices Regulations (CCR Title 10)
CCR Title 10, Section 2695.7(b)
Upon receiving proof of claim, every insurer shall immediately, but in no event more than forty (40) calendar days, accept or deny the claim, in whole or in part.
CCR Title 10, Section 2695.7(c)
If the insurer denies or rejects the claim, the insurer must provide written notice to the claimant specifying the factual and legal basis for the denial or rejection.
CCR Title 10, Section 2695.7(d)
Every insurer shall conduct and diligently pursue a thorough, fair and objective investigation of the reported claim. No insurer shall persist in seeking information not reasonably required for the resolution of a claim.
CCR Title 10, Section 2695.7(g)
Upon acceptance of the claim, an insurer shall immediately, but in no event more than thirty (30) calendar days, make payment of the claim.
Elements of a Bad Faith Claim
Insurance policy exists - You have a valid policy with the insurer
Covered loss occurred - The claim falls within policy coverage
Unreasonable conduct - Insurer's investigation or denial was unreasonable
Knowledge or recklessness - Insurer knew or should have known its conduct was unreasonable
Damages resulted - You suffered harm due to the insurer's conduct
The Egan Standard
Under Egan v. Mutual of Omaha Ins. Co. (1979), California courts hold that insurers owe a duty of good faith and fair dealing to their insureds. This includes conducting a thorough and objective investigation of claims. Breach of this duty can result in tort liability beyond contract damages, including emotional distress and punitive damages.
Evidence Checklist
Documents to gather before sending your demand letter
Essential Claim Documents
✓
Insurance policy - Your complete policy including declarations page and all endorsements
✓
Claim submission - Copy of your initial claim and all updates you submitted
✓
Proof of loss - Signed proof of loss form if you submitted one
✓
Correspondence log - All letters, emails, and notes of phone calls with the insurer
✓
Denial letter - If claim was denied, the written denial and stated reasons
✓
Timeline - Dates of all key events: loss, claim filed, adjuster contacts, denial
Evidence of Investigation Deficiencies
✓
Witness list - Names and contact information of witnesses the adjuster failed to interview
✓
Ignored evidence list - Itemized list of documents, photos, or reports you provided that were not addressed
✓
Your evidence copies - Copies of all evidence you submitted (photos, receipts, estimates, reports)
✓
Expert reports - Any independent expert opinions that contradict the insurer's position
✓
Adjuster notes - If obtained through request, notes showing limited or biased investigation
Supporting Documentation
✓
Police/fire reports - Official reports related to the loss
✓
Medical records - If injury claim, records the insurer should have obtained
✓
Repair estimates - Contractor or mechanic estimates for damage
✓
Witness statements - Written statements from witnesses you contacted yourself
✓
Photos/videos - Visual documentation of damage or conditions
Request Your Claim File
Under California law, you are entitled to a copy of your claim file. Send a written request to the insurer asking for all documents in your claim file, including adjuster notes, investigation reports, and internal communications. This can reveal the extent of the investigation deficiencies.
Understanding Your Damages
What you can recover in a bad faith insurance claim in California
Categories of Damages
Category
Description
Contract Damages
The full policy benefits owed under your insurance contract
Consequential Damages
Financial losses caused by the claim denial (e.g., lost business, additional living expenses)
Emotional Distress
Anxiety, stress, and mental anguish caused by the insurer's conduct
Attorney Fees
Brandt fees - attorney fees incurred to obtain policy benefits
Punitive Damages
Additional damages to punish particularly egregious conduct (requires malice, oppression, or fraud)
Contract vs. Bad Faith Damages
Contract Claim Only
If you sue only for breach of contract, you can recover:
Policy benefits owed
Interest on delayed payments
Bad Faith Claim (Tort)
If the insurer's conduct rises to bad faith, you can also recover:
All consequential economic damages
Emotional distress damages
Attorney fees (Brandt fees)
Punitive damages (if conduct was malicious, oppressive, or fraudulent)
Sample Calculation
Example: Property Damage Claim with Bad Faith Investigation
Policy benefits wrongfully denied$75,000.00
Additional living expenses incurred$12,000.00
Lost rental income during delay$8,000.00
Emotional distress damages$25,000.00
Brandt fees (attorney fees for coverage)$15,000.00
COMPENSATORY DAMAGES$135,000.00
Punitive damages (if applicable)$100,000+
Punitive Damages Require "Clear and Convincing" Evidence
To recover punitive damages in California, you must prove by clear and convincing evidence that the insurer acted with malice, oppression, or fraud. Evidence of a pattern of similar conduct, internal policies encouraging claim denials, or deliberate destruction of evidence can support punitive damages.
Sample Language
Copy and customize these paragraphs for your demand letter
Opening - Investigation Complaint
I am writing to formally complain about the inadequate and deficient investigation of my insurance claim (Claim No. [CLAIM NUMBER]) and to demand that you conduct a proper, thorough, and unbiased investigation as required by California law.
Failure to Interview Witnesses
Your investigation failed to interview critical witnesses who have direct knowledge of the facts supporting my claim. Specifically, I provided the names and contact information for the following witnesses: [LIST WITNESS NAMES]. Despite my requests, your adjuster did not contact any of these witnesses. Under CCR Title 10, Section 2695.7(d), you are required to conduct a thorough and objective investigation, which necessarily includes interviewing relevant witnesses.
Evidence Ignored
Your claims file ignores substantial evidence I submitted in support of my claim. Specifically, the following evidence was either not reviewed or dismissed without explanation: [LIST IGNORED EVIDENCE - photos, documents, expert reports, etc.]. Your denial letter does not address this evidence, which directly contradicts the basis for your denial. This failure to consider relevant evidence violates the Fair Claims Settlement Practices Regulations.
Biased Investigation
The investigation of my claim appears to have been conducted with a predetermined outcome to deny coverage. Your adjuster [DESCRIBE SPECIFIC BIAS INDICATORS - e.g., only sought information supporting denial, used biased experts, ignored contradicting evidence, etc.]. This conduct violates Cal. Insurance Code Section 790.03(h)(5), which requires insurers to attempt in good faith to effectuate fair settlements when liability is reasonably clear.
Legal Citations - California
Your conduct violates California Insurance Code Section 790.03(h) and the Fair Claims Settlement Practices Regulations (CCR Title 10, Section 2695.7). Under these regulations, insurers must conduct a "thorough, fair and objective investigation" and must accept or deny claims within 40 days of receiving proof of claim. Your failure to properly investigate my claim constitutes an unfair claims settlement practice.
Demand for Action
I hereby demand that you: (1) Immediately conduct a complete and unbiased re-investigation of my claim; (2) Interview all witnesses I have identified; (3) Properly consider all evidence I have submitted; (4) Provide a written explanation addressing all evidence; and (5) Pay my claim in the full amount of $[AMOUNT]. I require a substantive response within 30 days of this letter.
Consequences Warning
If you fail to properly investigate my claim and provide a fair resolution within this timeframe, I will file a complaint with the California Department of Insurance, pursue a bad faith insurance claim in court, and seek all damages available under California law, including compensatory damages for the policy benefits owed, consequential damages, emotional distress damages, Brandt fees (attorney fees), and punitive damages for your willful misconduct.
Next Steps
What to do after sending your demand letter
Expected Timeline
Day 1-5: Insurance company receives and routes your letter
Day 5-14: Claims department reviews with management and/or legal
Day 14-30: Written response or request for more time
Possible Responses
Best Case: Re-investigation and Payment
The insurer agrees to re-investigate, considers all evidence, and pays your claim. Get everything in writing and ensure payment is for the full amount owed.
Middle Ground: Partial Resolution
The insurer offers a settlement or additional payment but less than you believe is owed. Consider whether to negotiate, accept, or escalate.
Worst Case: No Response or Continued Denial
The insurer ignores your letter or maintains its position. This strengthens your bad faith case. Proceed to the next steps below.
If They Don't Resolve Your Claim
File a CDI Complaint
The California Department of Insurance (CDI) investigates unfair claims practices. File online at insurance.ca.gov. While CDI cannot order payment, their investigation can pressure the insurer and document the bad faith.
Consult a Bad Faith Attorney
Insurance bad faith cases are complex. Many attorneys take these cases on contingency because successful claims can include attorney fees and punitive damages.
Consider Litigation
Bad faith insurance lawsuits can recover far more than the original claim amount. Document everything - your records of the inadequate investigation will be crucial evidence.
Statute of Limitations
In California, the statute of limitations for insurance bad faith claims is generally 2 years from the date you knew or should have known about the bad faith conduct. For breach of contract claims, the limit is 4 years. Don't delay - consult an attorney well before these deadlines.
Need Help With Your Bad Faith Claim?
Insurance bad faith cases often involve significant damages including punitive damages. Many experienced insurance attorneys take these cases on contingency, meaning no fee unless you win. A qualified attorney can evaluate your case, handle the litigation, and maximize your recovery.