A recent case in the California Supreme Court dealt the insurance industry a severe blow as they sought to in effect reduce insurance bad faith protections for policyholders in California by “deregulating” insurance. The Association of California Insurance Companies sought to strip the California Insurance Commissioner of broad powers to supervise insurer conduct.
The central issue in the case centered on a regulation issued by the Insurance Commissioner (CCR Sec 2695.183) concerning the steps an insurance underwriter must take when setting the “replacement cost” of a home when selling homeowners insurance in California. The regulation established a series of tasks to ensure that the replacement cost would cover the actual cost of replacing a home after a policy is issued which can (and often will) rise after a policy goes into effect.
A trial Court was asked to (and ultimately ordered) invalidate the regulation. The California Court of Appeal upheld the trial court’s decision.
The California Supreme Court has reversed the Court of Appeal, asserting the insurance commisioner “does in fact have the authority to regulate how replacement cost coverage is administered in this state.” This case was extremely important to California insurance policy holders as it would have attempted to dismantle protections regarding insurance bad faith and controls over how insurance companies conduct themselves in practice, underwriting and claims management. This ruling will have an important impact on insurance bad faith protections in California.
The insurance coverage attorneys at the Watkins Firm protect insurers who are declined coverage when a valid claim is submitted against a valid policy. Our attorneys serve as Cumis Counsel (independent counsel) representing policy holders who are defendants in insurance related disputes and lawsuits when the insurance company attorneys have a conflict of interest between protecting the policy itself, and the policy holder who purchased the insurance to provide that coverage. Insurance companies often attempt to preempt their responsibility by issuing “Reservation of Rights” letters. This letter basically tells an insured policy holder that the insurance company is concerned about a portion or all of the claim submitted under the policy in question.
If you are concerned about insurance bad faith protections for policyholders in California or the actions of your insurance company, have been denied coverage on a valid claim against a valid policy or have received a Reservation of Rights letter we invite you to call for a free consultation at 858-535-1511. Ask about “Cumis Counsel” protections and how your insurance company may have to cover the cost of your independent counsel at the Watkins Firm.