CCP Section 999 and OPL Practical Refresher

Questions and Answers

What can be considered evidence of an insurer's unreasonable conduct?

Clarifying policy provisions

Providing excessive documentation

Failing to respond to a demand entirely (correct)

Prompt response to demands

Which of the following is NOT one of the factors listed in CACI 2337 for determining unreasonable insurer conduct?

Failing to promptly settle a claim with clear liability

Unreasonably interpreting policy provisions

Delaying the payment of a claim without reason

Failing to provide coverage under all circumstances (correct)

In a claim where the insurer rejects a reasonable settlement, what indicates bad faith?

The insurer denying the claim without reviewing documents

Evidence of a potential subsequent judgment exceeding the settlement offer (correct)

A lack of communication with the claimant

The amount of the initial settlement offer being too low

How is the reasonableness of an insurer's conduct regarding bad faith determined?

On a case-by-case basis Signup and view all the answers

What changes has the introduction of § 999 aimed to achieve in the settlement process?

Promote fair and efficient settlements Signup and view all the answers

Which of the following is a requirement for insurers regarding policy-limit demands?

They must analyze demands comprehensively Signup and view all the answers

What does an unreasonable delay in investigating a claim indicate?

Potential bad faith by the insurer Signup and view all the answers

Which action would likely NOT be taken seriously under CACI 2337?

Quick settlement of a claim Signup and view all the answers

The third-party insurer is the plaintiff's insurer.

False Signup and view all the answers

When sending a policy limits demand letter, we can give the insurance company only 24 days to respond.

False Signup and view all the answers

The demand must be labeled as "time-limited" or mention CCP 999 explicitly for the demand to be reasonable.

True Signup and view all the answers

An adjuster low-balling us repeatedly can be part of a bad faith claim.

True Signup and view all the answers

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.