The state of California has proposed changes to insurance jury instructions. The impact of these changes could have a negative effect on consumers.
Bad Faith Litigation
In California, bad faith litigation occurs when an insurance company refuses to honor its obligations under a policy. This means that they are refusing to pay for certain claims made by policyholders. For example, if a homeowner experiences damages that they feel are covered under the policy, they will file a claim with their homeowner’s insurance company.
The company is responsible for paying the claim that is submitted by its insured. They may investigate the claim, and for whatever reason, decide to not pay the claim as requested. They may allege that the damage that has been caused is not something that they cover. In some of these circumstances, this is not true. The company is denying the claim simply to avoid paying it – they are more concerned with their bottom line than the needs of their customers.
Fortunately, those who feel their insurance company is acting in bad faith do have options available to them, but, these are extremely difficult cases. Insurance companies may refuse to negotiate with the policyholders, resulting in litigation. And that is why the change to these jury instructions could be bad for potential clients: it just makes things much harder for those with bad faith claims.
Changes to Come
The California Civil Instructions Committee oversees jury instructions within California. The Committee has decided to adopt changes to the current jury instructions in these cases.
Now, juries can decide that if a defendant refuses to accept a settlement, they are being unreasonable (and therefore rule against them). The Committee has defined ‘unreasonable’ to mean “that the insurer had no proper cause for its conduct.”
These changes mean that in addition to proving the insurer failed to accept a reasonable offer within policy limits, the insured must also prove that the conduct of the defendant’s insurer was unreasonable when they failed to accept said offer.
This change is pro-insurance company because now plaintiffs must prove that a rejected settlement demand is unreasonable specifically because the insurer had no proper cause to reject the demand.
We cannot stress how important it is to have an attorney handle these types of claims. Seek out an attorney that is well-versed in insurance law and understands these new changes. These proposed changes are not in the consumers’ favor; find an attorney who will be on your side.