📋 Overview

Delay allegations are among the most common bad faith claims against insurers. California Insurance Code 790.03(h)(3) prohibits failing to adopt and implement reasonable standards for prompt investigation and processing. This guide helps you defend against delay accusations and improve claims handling timelines.

⚠ Bad Faith Exposure

Unreasonable delay in processing claims is itself an unfair claims practice, even if the claim is ultimately paid.

🕒 Document Timelines

Maintain detailed activity logs showing all actions taken and reasons for any delays.

💰 Interest Exposure

Unreasonable delay may require payment of interest on claims benefits from date they should have been paid.

Common Delay Allegations

  • Failure to acknowledge - Not confirming receipt of claim within 15 days
  • Investigation delays - Taking too long to complete investigation
  • Decision delays - Not accepting/denying within 40 days of proof of claim
  • Payment delays - Not paying within 30 days of acceptance
  • Communication gaps - Failing to update insured on claim status
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Professional Response Letter

Timeline analysis, defense documentation, and formal response on attorney letterhead.

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🕒 Required Timelines

California regulations impose specific timing requirements on claims handling.

Key Regulatory Deadlines (10 CCR 2695.5)

Action Required Deadline Reference
Acknowledge receipt of claim 15 calendar days 2695.5(e)(1)
Begin investigation Immediately upon receipt 2695.7(d)
Accept or deny claim 40 calendar days from proof of claim 2695.7(b)
Pay accepted claim 30 calendar days from acceptance 2695.7(h)
Status updates (if investigation ongoing) Every 30 days 2695.7(c)(1)

⚠ Clock Starts and Stops

The 40-day clock runs from receipt of "proof of claim" - not initial notice. If you properly request additional information, the clock may toll until received. Document all requests and responses carefully.

🛡 Defenses to Delay Allegations

Valid reasons for extended processing time.

Incomplete Proof of Claim

The 40-day decision period doesn't begin until you receive complete proof of claim. If you promptly requested additional documentation, the clock is tolled.

When to use: You can document timely requests for missing information.

Claim Complexity

Complex claims involving multiple parties, extensive damages, or coverage issues may justify extended investigation, but you must document the complexity and provide regular updates.

When to use: Large property losses, multi-vehicle accidents, complex liability issues.

Third-Party Dependency

Waiting for information from third parties (medical records, police reports, other insurers) may justify delay if you can show diligent pursuit of information.

When to use: Document multiple requests and follow-up attempts.

Claimant Non-Cooperation

If the insured fails to provide requested documentation, attend examinations, or otherwise cooperate, this may toll or excuse delay.

When to use: Document all requests and claimant's failure to respond.

Catastrophe/Force Majeure

Natural disasters causing widespread claims may justify extended timelines, though you must still process as quickly as reasonably possible.

When to use: Documented surge events affecting claims department capacity.

🚨 Invalid Delay Excuses

  • "We were understaffed" - Not a valid regulatory defense
  • "The file was lost" - Internal failures don't excuse delay
  • "We were waiting for litigation" - Must still process coverage
  • "The claim was complex" - Without documented regular updates

📝 Sample Responses

Professional response templates for delay allegations.

Defense - Incomplete Information
We have reviewed your allegation that we unreasonably delayed processing this claim. We respectfully disagree. Our records show: - Claim was received on [DATE] - Acknowledgment sent within [X] days on [DATE] - Request for additional documentation sent [DATE] - Complete documentation not received until [DATE] Under 10 CCR 2695.7(b), the 40-day period for accepting or denying a claim runs from receipt of proof of claim. We were unable to complete our evaluation until we received the requested [documentation type]. Our decision was issued within [X] days of receiving complete information. Throughout this period, we provided status updates on [DATES] as required by regulation.
Defense - Complex Claim
We acknowledge this claim took longer than a routine matter to resolve, but deny that any delay was unreasonable. This claim involved [describe complexity - multiple properties, significant damages, coverage issues, etc.]. Our investigation required: - [Investigation step 1] - [Investigation step 2] - [Investigation step 3] Throughout this process, we: - Provided written status updates every 30 days as required - Responded promptly to all insured inquiries - Processed the claim as expeditiously as the facts permitted Given the claim's complexity, our handling timeline was reasonable and complied with California regulations.
Acknowledgment with Remediation
We have reviewed your concerns regarding the processing timeline for this claim. While we believe our handling was within regulatory requirements, we recognize the insured's frustration and are committed to prompt resolution. To address your concerns, we have: - Assigned a senior adjuster to expedite remaining issues - Issued payment for undisputed amounts of [$AMOUNT] - Committed to final resolution within [X] days We take our obligations under the Fair Claims Settlement Practices Act seriously and have implemented additional procedures to improve processing times on complex claims.

🚀 Next Steps

Step 1: Audit Timeline

Review claim file for all dates - receipt, acknowledgment, requests, responses, decisions.

Step 2: Document

Compile evidence showing regulatory compliance or valid reasons for any delays.

Step 3: Expedite

If claim still open, prioritize resolution to stop additional delay accrual.

Step 4: Respond

Provide detailed written response addressing each delay allegation.

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California Resources

  • Insurance Code 790.03(h): Unfair Claims Settlement Practices
  • 10 CCR 2695.5: File and Record Documentation
  • 10 CCR 2695.7: Standards for Prompt, Fair Settlements