Insurance Bad Faith FAQs
Answers to common questions about insurance bad faith. What your insurer is allowed to do — and what crosses the line — depends heavily on your state, so the answers below link through to the law that applies where you are. This is general information, not legal advice.
Can I sue my own insurance company?
Yes. Every state we serve recognizes a claim against your own insurer for handling a claim unreasonably. New Mexico goes further than California and Arizona by also allowing a claim under the insurance statute itself, which carries attorney fees where the violation was willful.
Is a denied claim automatically bad faith?
No — and this is the most common misunderstanding. Insurers are allowed to deny claims they have properly investigated and genuinely believe are not covered. Bad faith is about whether the denial was unreasonable and whether the investigation was real, not about whether you disagree with the outcome.
What can I recover beyond the policy benefits?
Potentially the losses the denial itself caused, emotional distress, attorney fees, and punitive damages where the conduct was serious enough. The mechanisms differ by state, and the differences are substantial.
How long do I have to sue my insurer?
There is no single answer, because a bad-faith case usually contains more than one claim and they do not share a deadline. Treat the earliest plausible date as the real one and get your specific facts reviewed early.
My insurer keeps delaying. Is that bad faith?
It can be. Unreasonable delay is recognized as a form of bad faith in all three states, and a documented timeline of your calls and correspondence is usually what proves it.
What does it cost to bring a bad faith case?
Nothing up front. These matters are handled on a contingency basis for qualifying cases, and the initial review is free and confidential.
California law — what people ask
Can I sue my insurance company under a California statute?
No — and this surprises people. California's unfair insurance practices statute lists things insurers may not do but gives policyholders no private right to sue over them; only the Department of Insurance enforces it. Your claim is for common-law bad faith, which is well established here and carries broader damages than a contract claim.
How long do I have to sue my insurer in California?
There is more than one deadline, and they differ. The bad-faith tort runs on a shorter period than the claim for breach of the written policy, so the same facts can be timely one way and too late the other. Your policy may also impose its own shorter suit-limitation period. Treat the earliest plausible date as the real one.
What can I recover beyond the policy benefits in California?
Because bad faith is a tort here, potentially the losses the denial itself caused, emotional distress, and — distinctively in California — the attorney fees you had to spend to recover the benefits the insurer should have paid, which are treated as damages rather than a fee award.
Can I get punitive damages against my insurer in California?
Sometimes, but the bar is high: oppression, fraud, or malice, proven to a higher standard than the ordinary civil one. Most bad-faith cases do not reach it. Where it is reached, the conduct usually looks like policy rather than error.
The insurer says the dispute was genuine. Does that defeat my claim?
Not by itself. California protects an insurer that investigated reasonably and still has a legitimate disagreement — but the protection depends on the investigation having been real. An insurer that ignored evidence or relied on a one-sided expert does not get it simply because a dispute exists on paper.
Can I sue the other side’s insurance company in California?
Not directly for bad faith. The duty runs to that insurer’s own policyholder, not to you. Where an insurer unreasonably refuses a settlement within limits and a judgment lands above them, its insured carries that exposure — and that claim can be assigned, which is the route by which claimants reach the insurer.