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Questions and Answers
What can be considered evidence of an insurer's unreasonable conduct?
What can be considered evidence of an insurer's unreasonable conduct?
Which of the following is NOT one of the factors listed in CACI 2337 for determining unreasonable insurer conduct?
Which of the following is NOT one of the factors listed in CACI 2337 for determining unreasonable insurer conduct?
In a claim where the insurer rejects a reasonable settlement, what indicates bad faith?
In a claim where the insurer rejects a reasonable settlement, what indicates bad faith?
How is the reasonableness of an insurer's conduct regarding bad faith determined?
How is the reasonableness of an insurer's conduct regarding bad faith determined?
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What changes has the introduction of § 999 aimed to achieve in the settlement process?
What changes has the introduction of § 999 aimed to achieve in the settlement process?
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Which of the following is a requirement for insurers regarding policy-limit demands?
Which of the following is a requirement for insurers regarding policy-limit demands?
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What does an unreasonable delay in investigating a claim indicate?
What does an unreasonable delay in investigating a claim indicate?
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Which action would likely NOT be taken seriously under CACI 2337?
Which action would likely NOT be taken seriously under CACI 2337?
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The third-party insurer is the plaintiff's insurer.
The third-party insurer is the plaintiff's insurer.
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When sending a policy limits demand letter, we can give the insurance company only 24 days to respond.
When sending a policy limits demand letter, we can give the insurance company only 24 days to respond.
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The demand must be labeled as "time-limited" or mention CCP 999 explicitly for the demand to be reasonable.
The demand must be labeled as "time-limited" or mention CCP 999 explicitly for the demand to be reasonable.
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An adjuster low-balling us repeatedly can be part of a bad faith claim.
An adjuster low-balling us repeatedly can be part of a bad faith claim.
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Study Notes
Introduction of CCP Section 999
- Effective January 1, 2023, California enacted CCP § 999 to clarify pre-litigation settlement demands in auto cases.
- Establishes a clearer definition of what constitutes a “reasonable” offer to settle, impacting how policy-limit demands are approached.
Policy-Limit Demands
- Policy-limit demands enable claimants to expedite the settlement process and possibly expose insurers to full liability if they deny a reasonable demand.
- Essential for claimants to prepare these demands properly to benefit from potential bad-faith claims against insurers.
Understanding Policy Limits
- Insurance policies set maximum payout limits for bodily injury and property damage, typically divided into per-person and per-accident limits.
- These demands require insurers to settle within defined policy limits established in the claim.
Bad-Faith Lawsuits
- Insurers must engage in fair dealings; failure to settle valid claims or unreasonable delays can constitute bad faith.
- The court clarified in Pinto v. Farmers Ins. Exch. that unreasonable rejection of settlement demands may expose insurers to bad faith liability.
Requirements Under § 999
- Claimants’ demands must be in writing, labeled as a “time-limited demand,” and reference § 999.
- Claims submitted need inclusion of several material terms:
- Clear acceptance time (30 days via electronic means, 33 days via standard mail).
- Unambiguous settlement offers covering all claims and satisfying all liens.
- Release from future liability, incident location, claim number, detailed injury descriptions, and supporting proof.
Compliance and Reasonable Proof
- Demands must include "reasonable proof," with ambiguity remaining on what constitutes this, aside from medical records and bills.
- CACI No. 2334 provides guidance on what might be deemed reasonable proof, focusing on the claimant’s injuries and potential liability.
Consequences of Non-Compliance
- Failure to comply with § 999 renders a policy-limit demand unreasonable, preventing the claimant from opening the policy for bad-faith claims.
- Unrepresented claimants have more flexibility compared to represented ones bound by these statutory requirements.
Insurers' Responses to Demands
- Upon receiving a demand, insurers can accept it, request clarification, or reject it—rejections must be in writing with clear explanations.
- Insurers must respond to demands and cannot simply disregard them; this lack of response may indicate unreasonable conduct.
Evaluating Insurer Conduct
- The reasonableness of an insurer’s response is assessed case-by-case, with CACI 2337 outlining various factors for consideration, including the clarity of liability and the timeliness of reactions.
Conclusion
- CCP § 999 aims to make the pre-litigation settlement process more transparent and efficient in auto-accident cases by enforcing specific statutory requirements for both claimants and insurers.
- The long-term impact of these changes will require further observation as stakeholders adapt to the new legal landscape.
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