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A Tip For Handling Uninsured and Underinsured Motorist Claims
A key to successful resolution of uninsured and underinsured motorist claims (UM claims) is to assert persistent and frequent pressure on the insurer to "make a determination of the claim."
Insurance Code section 790.034 requires insurers to provide notice to all claimants the applicability of, and upon request provide copies of the Fair Claims Settlement Practices Regulations in sections 2695.5, 2695.7, 2695.8, and 2695.9 of subchapter 7.5 of Chapter 5 of Title 10 of the Code of California Regulations. Section 2695.7 1 requires insurers to:
"immediately, but in no event more than forty (40) calendar days" after receiving proof of claim, "accept or deny the claim, in whole or part." (1.(b)) “provide the claimant a statement listing all bases for such rejection or denial and the factual and legal bases for each reason given for such rejection or denial which is then within the insurer’s knowledge." (1.(b) (1).)
Every 30 days, "until a determination is made or notice of legal action2 is served …
provide written notice of the need for additional time … and specify any additional information the insurer requires in offer to make a determination."
You should insist on the insurer’s basis for its determination of the claim, i.e., value. If you demand $100,000, and the insurer offers $50,000, it has denied the claim in part. Demand the factual and legal basis under Section 2695.7. for this partial denial of the claim
If the insurer does not make a determination/offer, ask them what other information it needs, and get it to the insurer as soon as you can. This put the ball in the insurer’s court to then make a determination, and requires it to "provide the claimant a statement listing all bases for such rejection or denial and the factual and legal bases for each reason given for such rejection or denial which is then within the insurer’s knowledge." (1.(b) (1).)
If a insurer makes a determination/offer to settle the claim that is not acceptable, demand that it pay that amount to its insured and agree to arbitrate the balance. Some insurers will comply.
Pressure to promptly determine the claim is essential to a successful outcome of the UM claim, and may (in my practice, almost always) lead to a subsequent claim for bad faith. It has been my experience that insurers are incapable of following the rules and regulations governing first-party claims. Most commonly, the insurer delays resolution and fails to "make a good faith effort to obtain a prompt, fair and equitable settlement of their insureds’ claims." (See Wilson v. 21st Century Ins. Co, (2007) 42 Cal.4th 713, 723-724; Brehm IV v. 21st Century Ins. Co. (2008) 166 Cal.App.4th 1225.)
Persistent reminders to the insurer of its affirmative obligations under the Regulations to promptly determine the claim or explain the reasons it has not, highlights the insurer’s bad faith as it drags its feet and treats its insured as it would a third party. Delay can be the same as denial of the claim, and the insurer’s failure to provide the details of the bases for its denials is a violation of the Regulations and bad faith.