Can I sue an insurance agency for punitive damages for acting in bad faith on my claim?

UPDATED: Oct 1, 2022

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Can I sue an insurance agency for punitive damages for acting in bad faith on my claim?

In November of 2016 a car turned into oncoming traffic and hit my car. The accident was very clearly the other driver’s responsability. I contacted his insurance company about payment of my claim which included vehicle repair and some minor medical costs. They would not recognize their client was at fault. My own insurance, which I thought covered me during this time had lapsed so I had to go after the other drivers insurance directly. They fought with me or ignored my calls and emails for a period of nearly 10 months until they finally accepted their driver was responsible. At that point the dragged things out and tried to settle with me only for the vehicle damages and low balled me all the time. I finally got a check today approximately 350 days after the original claim. I think they acted in bad faith. They knew their client was at fault right away and did everything possible not to pay me or acknowledge the claim. I think they should be punished to make sure that other people are not treated this way. Can I sue them for bad faith; 1 year is BS to settle a simple claim?

Asked on November 1, 2017 under Insurance Law, California


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 5 years ago | Contributor

No, you can't sue them for this. The problem you face is this: they have no duty to act in good faith towards you. You are not their customer; you don't have a policy or contract with them; you have not paid them for insurance; etc. Their only legal duty is to their own customer/insured. Since they don't have a legal duty to you, they can't act in "bad faith" towards you, any more than you would be acting in bad faith if someone (with whom you did not have a contract) claimed you owed them money (such as for claimed car accident or slip and fall at your home) and you took your time about addressing or dealing with their claim.
For future reference: if the other side and their insurer are dragging their feet, the way you force the issue is by suing the at-fault driver (you sue the driver, not the insurer); once you haul them into court, they have to deal with the matter.

IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

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