Top 10 Duties That Your Insurance Company Owes (What They Don’t Want You to Know)

Key Takeaways:

Insurance companies in California owe you clear legal duties

• They must respond promptly, investigate fairly, and decide claims within strict timelines. Knowing these rights helps you recognize bad faith behavior and push back.

Written explanations protect you from vague denials

• Every denial must cite exact policy language. If the insurer offers only a blanket statement, you can demand details to hold them accountable.

Bad faith tactics open the door to legal action

• Lowball offers, stalling, or misrepresenting coverage can justify a bad faith claim. Legal help ensures you aren’t pressured into settling for less than you deserve.

A California personal injury lawyer can hold insurers accountable

• Attorneys know the regulations, spot violations quickly, and fight for fair compensation. With the right lawyer, you can level the playing field against powerful insurance companies.

10 Duties of Insurance Companies in California

You’ve been waiting for a decision on your serious accident claim for weeks, maybe even months. That’s not just frustrating; it might be a violation under California law.

The state has a set of strict rules that insurers must follow. Knowing these rules can help you recognize when your insurer is crossing the line, and that’s the first step to protecting yourself.

With a clear understanding of the duties of an insurance company, you can navigate the claims process more effectively. This knowledge safeguards your rights and ensures you receive the benefits you are entitled to.

1. Duty to acknowledge and respond promptly

Insurers must acknowledge all communications within 15 calendar days. If you email or send a letter about your claim, they can’t simply ignore it. A two-week silence is already a warning sign.

Delays often serve one purpose: to pressure you into accepting less or walking away. Always document your communications and follow up in writing if deadlines pass.

2. Duty to investigate claims in a reasonable timeframe

Once you file, the company must begin investigating within a few business days. That includes reviewing records, speaking with witnesses, and gathering evidence. They cannot stall for months with vague excuses like “still reviewing paperwork.”

For example, after a car crash, you provide a police report and medical records right away. If the insurer still claims to be “waiting on documents” months later, that may signal bad faith.

3. Duty to accept or deny claims within 40 days

Under California’s Fair Claims Settlement Practices Regulations, insurers must accept or deny your claim within 40 days of receiving proof of loss. It’s a binding deadline, not a suggestion.

If the 40-day period passes without a decision, you can demand answers, file a complaint with the California Department of Insurance, or seek legal help. Prolonged silence is a violation of your rights.

4. Duty to provide a written explanation of denial

If your claim is denied, insurers must issue a written explanation citing the exact policy language they relied on. A vague “not covered” response is not enough.

If you receive a blanket denial, request a detailed letter. Failure to provide one is a red flag for bad faith practices.

5. Duty to act in good faith

Every insurance contract carries an implied duty of good faith and fair dealing. Insurers must treat policyholders honestly and fairly.

Bad faith tactics may include offering unreasonably low settlements, repeatedly requesting unnecessary paperwork, and dismissing medical evidence without justification.

If an adjuster claims your injury is “minor” despite MRI results showing otherwise, that’s not just unfair; it could be unlawful.

6. Duty to pay undisputed amounts promptly

Even if some portions of your claim are still under review, insurers must immediately pay out the amounts already agreed upon.

For example, if your car damage claim has been approved but your medical expenses are still being evaluated, they cannot withhold the car payment as leverage.

7. Duty to communicate all policy benefits

Insurers must disclose all benefits under your policy, not just those that cost them the least.

For example, your auto policy might include rental car reimbursement or medical payments coverage. If the insurer fails to mention these, they are withholding benefits you already paid for. Always ask for a written explanation of every benefit you’re entitled to.

8. Duty to maintain accurate records

Insurers are required to keep thorough records of all communications, actions, and payments related to your claim.

If they claim your paperwork was “lost” or deny ever receiving your call, your own records—emails, letters, call logs—can protect you. A pattern of poor record-keeping is another sign of mishandling.

9. Duty not to misrepresent policy terms

Insurers may not misinterpret or twist policy language to deny coverage. Misrepresentation is a serious violation.

For example, they may argue your injury isn’t covered when in reality, the exclusion applies only in limited circumstances. Always ask them to point to the exact clause in writing. Misrepresentation can justify a bad-faith claim.

10. Duty to settle fairly when liability is clear

When liability is obvious—such as in a car accident where the other driver admitted fault—insurers must work toward a fair settlement instead of dragging out the process.

Delays in these circumstances may be a tactic to wear you down, and under California law, that can constitute bad faith.

When to Call a Lawyer

While knowing the duties of your insurance company gives you leverage, sometimes that’s just not enough. If they’re dodging, delaying, or flat-out denying your claim, it might be time to get legal help.

You should consider contacting an attorney if you experience:

• Unreasonable delays or vague denials without citing policy terms.
• Repeated silence or miscommunication, even after you follow up.
• Bad faith tactics like lowball offers, shifting blame, or intimidation.

At RMD Law, our attorneys know these tactics inside and out. We know how to hold insurers accountable, identify violations, and fight to get you the fair compensation you deserve.

Claim Your Rights, Claim Your Power

Insurance companies don’t always play fair. Most policyholders don’t realize how many obligations insurers have until problems arise. By understanding the duties of an insurance company, you can spot red flags early, protect yourself from unfair practices, and take action when necessary.

If your insurer continues to ignore your rights, working with an experienced California personal injury lawyer might be the key to a fair outcome. At RMD Law, we’ve built a reputation for standing up to insurers and fighting for clients who’ve been mistreated.

Contact RMD Law today for a free case evaluation and let us fight for the compensation you deserve.

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