3 Ways Insurance Companies Try to Minimize Car Accident Settlements

3 Ways Insurance Companies Try to Minimize Car Accident Settlements

When you or a loved one has been the victim of a personal injury, the last thing you want to devote time and injury to is fighting with an insurance company to recover the compensation properly owed to you. Insurance companies and their lawyers and claims adjusters know this, and they will take advantage of it.

Remember, despite the benevolence of their commercials, insurance companies are in the business of making money. They make money when they pay out in settlements less than the amount they take in in premium dollars. So, they want you to accept as small a settlement as possible. There are three common tactics for achieving this goal.


An insurance company can legitimately delay paying your claim while investigating the facts and circumstances underlying the claim. The company must assure itself that the evidence supports the facts and damages you claim. However, the legitimate delays eventually end, and the insurance company is then engaging in a bad faith delay of your claim. By delaying in this way, the insurance company takes advantage of your growing need for the settlement dollars, which it hopes will cause you to accept a lower settlement amount. This delay also allows the insurance company to generate interest from the dollars it will eventually pay to you. Every day of delay is another day of interest. Finally, the insurance company may be angry about how aggressively you are pursuing your claim; its delay becomes punitive at that point and is clearly an act of bad faith.

Denial of the Claim

An insurance company in California must promptly admit or deny your claim. Failing to do so constitutes bad faith under California law. Some of the ways an insurance company can engage are bad faith are:

  • Unreasonably denying policy benefits
  • Failing to approve or deny the claim within a reasonable time
  • Refusing to make a good faith effort to settle when liability is clear
  • Failing to justify a denial promptly

These kinds of actions can constitute a bad faith denial under California law.

Defending an Indefensible Claim

Sometimes liability is clear in an insurance claim. If an insurance company fails to process such a claim promptly or forces you to litigate such a claim, the company’s conduct constitutes a bad faith handling of the claim. Sometimes this will happen when the company refuses to negotiate a reasonable settlement offer. At other times, the company refuses to make any reasonable offer to settle the case, forcing the claimant to litigate.

Insurance Company Bad Faith

Insurance is based on a contract (you pay premiums; the company pays benefits). Like all contracts, the policy includes an implied provision that the parties will act in good faith toward one another. When an insurance company engages in dilatory tactics to avoid settling your claim, it may be acting in bad faith.

California law also provides for a bad faith insurance claim by a policyholder. Under that law, bad faith occurs whenever an insurance company fails to perform its duties under the insurance policy contract. If the company acts in bad faith, you can file a bad-faith lawsuit to recover those benefits.

There are two types of claims – first-party bad faith is when your insurance company acts in bad faith and are like a breach of contract claim. Third-party bad faith occurs when someone else’s insurance company, like the at-fault party’s company in a personal injury case, fails to deal with you in good faith.

You may, if successful, recover the total amount of the loss, damages for any emotional distress the bad faith caused you, your attorney’s fees, and punitive damages. An OC car accident lawyer can help you navigate the challenging law regarding bad faith insurance claims.