Insurance DOI Complaint and Bad-Faith Demand — California

Insurance DOI Complaint and Bad-Faith Demand (California)

Quick-Reference Summary

Part A — DOI Complaint Cover Letter

Letterhead

[Sender Law Firm Name]
[________________________________]
[________________________________]
[City], CA [Zip Code]
Phone: [________________________________]
Email: [________________________________]
State Bar No.: [________________________________]

Date and Recipient

Date: [__/__/____]

VIA U.S. MAIL AND ONLINE CDI PORTAL
RFA Confirmation No.: [________________________________]

California Department of Insurance
Consumer Services Division
300 South Spring Street, South Tower
Los Angeles, CA 90013

Subject Line

RE: REQUEST FOR ASSISTANCE — UNFAIR CLAIMS SETTLEMENT PRACTICES BY [CARRIER LEGAL NAME] (NAIC # [____]) — POLICY NO. [________________] — CLAIM NO. [________________]

I. Insured Information

II. Carrier and Policy Information

III. Claim Background

Date of Loss: [__/__/____]
Claim Number: [________________________________]
Date Claim Reported: [__/__/____]
Type of Claim: [________________________________]
Amount Demanded: $[________________________________]
Amount Paid To Date: $[________________________________]

Summary of Loss:

[________________________________]
[________________________________]

IV. Specific Unfair Practices Alleged

The conduct of [Carrier] violates the following provisions of the California Unfair Insurance Practices Act, Cal. Ins. Code § 790.03(h), and the Fair Claims Settlement Practices Regulations, 10 CCR § 2695.1 et seq.:

☐ § 790.03(h)(1) — Misrepresenting to claimants pertinent facts or insurance policy provisions relating to coverages at issue.
☐ § 790.03(h)(2) — Failing to acknowledge and act reasonably promptly upon communications with respect to claims. (See 10 CCR § 2695.5(b) — 15 calendar days.)
☐ § 790.03(h)(3) — Failing to adopt and implement reasonable standards for the prompt investigation and processing of claims.
☐ § 790.03(h)(4) — Failing to affirm or deny coverage within a reasonable time after proof of loss has been completed. (See 10 CCR § 2695.7(b) — 40 calendar days.)
☐ § 790.03(h)(5) — Not attempting in good faith to effectuate prompt, fair, and equitable settlements where liability has become reasonably clear.
☐ § 790.03(h)(6) — Compelling insureds to institute litigation to recover amounts due by offering substantially less than the amounts ultimately recovered.
☐ § 790.03(h)(7) — Attempting to settle a claim for less than the amount to which a reasonable person would believe entitled.
☐ § 790.03(h)(11) — Failing to provide a reasonable explanation of the basis relied on in the policy for denial of a claim or for the offer of a compromise settlement. (See 10 CCR § 2695.7(b)(1).)
☐ § 790.03(h)(13) — Failing to provide promptly a reasonable explanation of the basis for denial.
☐ Other [________________________________]

Factual basis for each practice alleged (claim timeline, communications, internal contradictions, low-ball offers, requested-but-not-obtained documents, etc.):

[________________________________]
[________________________________]
[________________________________]

V. Documents Enclosed

☐ Declarations page and full policy (if available)
☐ Proof of loss / sworn statement in proof of loss
☐ Claim notification correspondence
☐ Carrier reservation-of-rights and denial letters
☐ Estimates, photographs, appraisals, expert reports
☐ Medical bills and records (PI / UM / health / disability)
☐ Adjuster communications (letters, emails, recorded-statement transcript)
☐ Demand letter to carrier (Part B, below)
☐ HIPAA / written authorization (Section VII)

VI. Requested DOI Action

Insured respectfully requests that the Department:

1. Open a formal complaint file and assign an investigator.
2. Direct [Carrier] to provide a written response addressing each violation alleged above.
3. Open a market-conduct examination if pattern conduct is evident across CDI complaints involving [Carrier].
4. Refer the matter to the CDI Enforcement Branch for potential civil penalties under Cal. Ins. Code § 790.035 ($5,000–$10,000 per non-willful act; up to $55,000 per willful act).
5. Provide Insured a copy of all carrier responses and the Department's closing letter.

VII. Authorization for Carrier to Communicate with DOI

The undersigned Insured authorizes [Carrier] and its agents, attorneys, third-party administrators, and affiliates to release to the California Department of Insurance any and all records relating to Policy No. [________________] and Claim No. [________________], including but not limited to claim file notes, recorded statements, adjuster logs, reserves, underwriting file, and all internal communications. This authorization is effective for one year from the date signed and may be revoked in writing.

Insured Signature: [________________________________]
Print Name: [________________________________]
Date: [__/__/____]

Signature Block (Counsel)

Respectfully submitted,

[________________________________]
[Attorney Name], Cal. Bar No. [________]
[Law Firm]
Attorney for Insured

cc: [Carrier — Claims Department]
cc: [Carrier — Statutory Agent for Service, California Secretary of State filing]

Part B — Bad-Faith Demand Letter to Carrier

Letterhead

[Sender Law Firm Name]
[Same as above]

Date and Recipient

Date: [__/__/____]

VIA CERTIFIED MAIL, RETURN RECEIPT REQUESTED
Certified Mail No.: [________________________________]
AND VIA EMAIL TO: [________________________________]

[Carrier Legal Name]
Attn: Claims Department — Bad Faith / Coverage Counsel
[________________________________]
[City], [State] [Zip Code]

Cc (California Statutory Agent):
[Agent Name per CDI/CA Secretary of State]
[Address]

Subject / Re: Block

RE: NOTICE OF BREACH OF IMPLIED COVENANT OF GOOD FAITH AND FAIR DEALING — DEMAND FOR PAYMENT OF POLICY BENEFITS — PRESERVATION OF EVIDENCE

Insured: [________________________________]
Policy Number: [________________________________]
Claim Number: [________________________________]
Date of Loss: [__/__/____]

I. Parties

Insured: [________________________________], a [resident / California corporation / California LLC] residing or with its principal place of business at [Address], California.

Carrier: [Carrier Legal Name], a [state] [corporation/insurer] authorized to transact insurance in California (CDI Company Code [____]; NAIC [____]).

II. Statement of Claim and Carrier Response History

Narrative: [________________________________]

III. Violations of the California Unfair Claims Settlement Practices Act

Although Cal. Ins. Code § 790.03 does not create a private right of action (Moradi-Shalal v. Fireman's Fund, 46 Cal. 3d 287 (1988)), its standards and those of the Fair Claims Settlement Practices Regulations (10 CCR § 2695.1 et seq.) are admissible evidence of the standard of care in a common-law bad-faith action (Jordan v. Allstate, 148 Cal. App. 4th 1062, 1078 (2007)). [Carrier] has violated, at minimum, the following subsections:

☐ § 790.03(h)(1) — Misrepresented policy terms by [________________________________]
☐ § 790.03(h)(2) — Failed to acknowledge within 15 calendar days (10 CCR § 2695.5(b)) — [________________________________]
☐ § 790.03(h)(3) — Failed to conduct a reasonable investigation; specifically failed to [________________________________]
☐ § 790.03(h)(4) — Failed to accept or deny within 40 calendar days after proof of loss (10 CCR § 2695.7(b)) — [________________________________]
☐ § 790.03(h)(5) — Failed to effectuate a prompt, fair, and equitable settlement where liability has become reasonably clear — [________________________________]
☐ § 790.03(h)(7) — Compelled Insured to demand more than the carrier's low-ball offer of $[________] when the covered loss is at least $[________]
☐ § 790.03(h)(13) — Failed to provide a reasonable written explanation for the denial in compliance with 10 CCR § 2695.7(b)(1)

IV. Common-Law Bad-Faith Basis

California recognizes an implied covenant of good faith and fair dealing in every insurance contract. Gruenberg v. Aetna Ins. Co., 9 Cal. 3d 566, 573–75 (1973). Breach of that covenant by an insurer sounds in tort as well as contract, and exposes the carrier to:

1. Contract benefits wrongfully withheld;
2. Consequential damages foreseeable from the breach (Egan v. Mutual of Omaha, 24 Cal. 3d 809 (1979));
3. Emotional-distress damages (Crisci v. Security Ins. Co., 66 Cal. 2d 425, 433–34 (1967));
4. Brandt fees — attorney's fees incurred to recover policy benefits, recoverable as compensatory damages (Brandt v. Superior Court, 37 Cal. 3d 813 (1985));
5. Punitive damages under Cal. Civ. Code § 3294 upon clear and convincing evidence of "oppression, fraud, or malice" (e.g., institutional bad-faith claims practices — Neal v. Farmers Ins. Exchange, 21 Cal. 3d 910 (1978)).

For third-party liability claims, the carrier owes the insured a duty to accept a reasonable settlement within policy limits when liability is reasonably clear (Comunale v. Traders & General Ins. Co., 50 Cal. 2d 654 (1958); Crisci, 66 Cal. 2d at 430–33). Breach exposes the carrier to the full amount of any excess judgment, regardless of policy limits.

V. Demand for Payment and/or Specific Performance

Insured demands within thirty (30) days of receipt of this letter:

1. Payment of policy benefits in the amount of $[________________];
2. Payment of incidental and consequential damages in the amount of $[________________];
3. Withdrawal of the denial / reservation-of-rights position dated [__/__/____];
4. Production of the complete unredacted claim file, including adjuster's diary, reserves, supervisor notes, and all internal communications;
5. Written confirmation that no claim-file documents have been destroyed since the date of loss.

VI. Damages Sought If Not Resolved

VII. Litigation Hold / Evidence Preservation Notice

[Carrier] is on notice to preserve all documents, ESI, recorded statements, claim-file entries, reserve information, adjuster notes, supervisor notes, examiner notes, internal emails, instant messages, training materials, claims-manual provisions in effect on the date of loss, all communications with reinsurers and reinsurance brokers, and all communications with vendors (independent adjusters, engineers, contractors, SIU, medical-bill auditors, surveillance vendors) relating to Insured, the policy, or the claim. The duty to preserve attaches as of the date of this letter and is independent of any later litigation hold. Cedars-Sinai Med. Ctr. v. Superior Court, 18 Cal. 4th 1, 12 (1998); Williams v. Russ, 167 Cal. App. 4th 1215 (2008).

VIII. Response Deadline and Method

Please respond in writing to undersigned counsel on or before [__/__/____] (30 days from the date of this letter). Response must be sent by email and U.S. Mail to the address above. Silence or a further low-ball offer will be treated as a final refusal and Insured will proceed to file suit seeking the full scope of damages set forth in Section VI, including punitive damages, without further notice.

Signature Block

Respectfully,

[________________________________]
[Attorney Name], Cal. Bar No. [________]
[Law Firm]
Attorney for Insured

Enclosures: Exhibit A — Policy; Exhibit B — Proof of loss; Exhibit C — Carrier denial; Exhibit D — Estimates / expert reports

Part C — Pre-Filing Checklist

☐ Full certified policy obtained from carrier (Cal. Ins. Code § 791.08 record-access request)
☐ Declarations page and all endorsements confirmed
☐ Suit-limitation period in policy diaried (often 12 months from inception of loss for homeowner; check Cal. Ins. Code § 2071)
☐ Contractual / statutory SOL diaried (CCP § 337 / § 339)
☐ Claim file complete and indexed chronologically
☐ All written and oral communications preserved (request recorded-statement transcripts)
☐ Damages quantified with itemized estimates / repair bids / medical specials
☐ Expert reports obtained where needed (cause-and-origin, public adjuster, vocational, treating physician)
☐ DOI Request for Assistance filed and confirmation number obtained
☐ Bad-faith demand sent via certified mail RRR and email
☐ Litigation-hold notice issued
☐ Punitive-damages predicate evidence inventoried (claim manual, training materials, prior similar conduct)
☐ Brandt-fee retainer documented (hourly recordkeeping begins)
☐ Comparison to Royal Globe / Moradi-Shalal / Egan / Gruenberg / Brandt confirmed by counsel

Sources and References

• California Department of Insurance — Consumer Help and RFA Form: https://www.insurance.ca.gov/01-consumers/101-help/
• Non-Health Request for Assistance (RFA) Form (CSD-001): https://www.insurance.ca.gov/01-consumers/101-help/upload/RFAnonhealth.pdf
• Cal. Ins. Code § 790.03 (UCPA): https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=INS&sectionNum=790.03
• Cal. Ins. Code § 790.035 (penalties): https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=INS&sectionNum=790.035
• 10 CCR § 2695.1 et seq. (Fair Claims Settlement Practices Regulations): https://govt.westlaw.com/calregs
• Moradi-Shalal v. Fireman's Fund, 46 Cal. 3d 287 (1988)
• Gruenberg v. Aetna Ins. Co., 9 Cal. 3d 566 (1973)
• Egan v. Mutual of Omaha, 24 Cal. 3d 809 (1979)
• Brandt v. Superior Court, 37 Cal. 3d 813 (1985)
• Comunale v. Traders & General Ins. Co., 50 Cal. 2d 654 (1958)
• Cal. Civ. Code § 3294 (punitive damages): https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=CIV&sectionNum=3294