The California Court of Appeals, Second District, published a decision on June 27, 2014 which gives a victory to California policyholders. The Court in Maslo v. Ameriprise held that a policyholder with UIM coverage (underinsured motorist coverage) can make a bad faith claim against his/her insurer based upon the insurance company’s failure to investigate and evaluate a valid uninsured motorist claim and instead insisting/forcing that the policyholder arbitrate his or her UIM claim. Further, the Court held that the mere fact that an arbitrator’s ultimate award to a policyholder is less than policy limits or the insured’s initial demand does not relieve the insurance company of liability and bad faith for breach of its statutory and common law duties to investigate and evaluate claims in good faith. The Court held that even where the amount of damages is lower than the policy limits, an insurer may act unreasonably by failing to pay damages that are certain and demanding arbitration on those damages.
Thus, an insurance company may be liable for bad faith in failing to attempt to effectuate a prompt and fair settlement (1) where the insurance company unreasonably demands arbitration; or (2) the insurance company commits other wrongful conduct, such as failing to investigate a claim. The Court disagreed with the defendant Ameriprise’s argument that the policyholder’s initial demand made arbitration inevitable, noting that it was the insurance company’s alleged refusal to investigate and process the claim that precluded any possible settlement and made arbitration inevitable, causing the policyholder to include unnecessary costs and fees incurred for the arbitration.
If you or your loved one needs legal representation to pursue a UIM claim with your insurance company, please contact York Law Firm at 916-643-2200. Our law firm is dedicated to representing injured victims and to make sure that insurance companies honor their agreements with their policyholders.