CA 1st Party Bad Faith for Denial of Rental and Failure to Respond?

[Alan2020]

I'm curios if I should pursue a bad faith claim against my automobile insurance carrier.

My claim involves an auto accident where the policy covers rental car for the "reasonable repair period". The carrier stopped paying for the rental but never advised me of such. I found out 3 weeks after they stopped paying when the rental company called me as asked if I was aware the rental was no longer being paid. After contacting the carrier I received an email from them that essential said "We contacted the body shop and asked for repair information. The shop did not reply. We assumed the shop would call us back and there would not be a problem, but since they didn't, all delays are the fault of the shop and you are responsible for the rental charges. Sorry for the poor communication." As a result of their "poor communication" I ended up with a rental bill out of pocket expense in excess of $1,000 that I would not have incurred if they notified me that they were stopping coverage, as I could have gotten by without the rental car and would have returned it.

Whether or not the shop was slow to respond to the carrier appears irrelevant. There was detrimental reliance on my part that they were covering the rental since at no time did they inform me they were terminating my first party rental car coverage.

I believe the two sections below are applicable to the rental car issue:

Section 2695.85. Auto Body Repair Consumer Bill of Rights

4. BE INFORMED ABOUT THE EXTENT OF COVERAGE, IF ANY, FOR A REPLACEMENT RENTAL VEHICLE WHILE A DAMAGED VEHICLE IS BEING REPAIRED.​

Section 2695.7. Standards for Prompt, Fair and Equitable Settlements

(1) Where an insurer denies or rejects a first party claim, in whole or in part, it shall do so in writing and shall provide to the claimant a statement listing all bases for such rejection or denial and the factual and legal bases for each reason given for such rejection or denial which is then within the insurer's knowledge.​

A second issue pertains to failure to respond to communication. The carrier sent to me an at fault letter. I sent a reply back disputing their fault determination that was made without ever speaking to me. I provided scene photographs and video frame shots and details why I was not at fault in my rebuttal letter. I received a phone call in response to my letter where the adjuster said they were not going to change the determination as I had not provided any information such as a police report or photographs. I pointed out I had indeed provided photographs and additional information in the letter. The adjuster said he would send me a link to upload the video from the still frame clips. The adjuster never sent the video upload link, nor did he ever reply in writing to my letter disputing fault for the accident. It's been over a month since I sent my letter to them.

I assume the section below is applicable, but not 100% certain the response from the carrier has to be in writing.

Section 2695.5. Duties upon Receipt of Communications

(b) Upon receiving any communication from a claimant, regarding a claim, that reasonably suggests that a response is expected, every licensee shall immediately, but in no event more than fifteen (15) calendar days after receipt of that communication, furnish the claimant with a complete response based on the facts as then known by the licensee. This subsection shall not apply to require communication with a claimant subsequent to receipt by the licensee of a notice of legal action by that claimant.​

Would appreciate feedback on whether there is enough here to pursue a bad faith action against the carrier, or to pursue this in Small Claims Court. Thanks!

 

[fed up]

Having a bit of a hard time since you have not gone into mention about the accident itself. Also I've always covered clients for $30 per day rental. 3 weeks, 21 days, @ $30, is $630 not $1000. What did you rent?

 

[Josh]

I think you are under the impression the courts are significantly more useful than they are.

Setting that aside, the insurance company likely provided you with a copy of your policy and coverages when you signed up, and likely at renewals you received either the full version again or some lighter version; either way, you should know what your coverage amounts are because they were likely told to you.

If you want to go to small claims court, have at it, but if the insurance company says "we told him what the policy limits were when they bought it and they were always able to call and ask questions", it would be very difficult to find the carrier at fault for anything.

Now, if you're just grumpy because something bad happened that you don't think is your fault and it isn't fair, let's look at the actual breakdown:

Parties:

Insured
Body Shop
Rental Company
Insurance Carrier.

If the rental company was getting paid directly by the insurance company, and you were not informed of what you would be paying after the insurance covers it (and/or some other version of that argument), you likely could try to sue them and at least have a better story to tell a judge (i.e., "they told me it was covered by the insurance, and then I got the bill").

Of course you could also take a look at the body shop as being a liable party as they delayed and/or failed to communicate. I don't think that's as strong of a position as arguing that the rental company should have informed you, but overall, I think you should probably just take the loss and move on. Odds of you being able to recover much of anything are probably fairly low and it will involve spending more time dealing with the ugliness than it likely would be worth.

Obviously, I have no dog in this fight, you do you, but if we were just two guys sitting at a bar talking about life, I'd say "life's tough, get a helmet" and move on.

 

[Alan2020]

I should have mentioned I am rather knowledgeable in how insurance claims should be handled and policy coverages, just not up to speed at what level a bad faith action is triggered.

My policy does not set a limit for number of days or maximum amount for the rental coverage. (yes I know that is not very common.) It provides coverage for a comparable vehicle for the reasonable repair time for the vehicle. (I have a high end vehicle so their letter to me said I could rent any car of my choice. Nothing at the rental agency is really comparable. I actually rented a small compact car from the rental agency.)

It very well may be that the shop took longer than "reasonable" for the repair, however, my coverage is with the insurance carrier. It is the insurance carrier and not the body shop or rental agency that has a duty to communicate to me when coverage is denied or suspended. The carrier cannot rely on a third party, such as the shop or rental agency, guessing that they would stop paying the bill, and then assume they would communicate that to me.

With this being California, insurance carriers are held to a higher standard than in many other states. I'm pretty sure there are at least 2 DOI violations that could results in fines to the carrier if I filed a complaint with the DOI, but I really don't care about that. I'm annoyed at the complete lack of diligence in investigating the claim, and their own admitted "poor communication" during the claim process. I'm 80% confident I can recover the rental out of pocket amount in Small Claims Court. However, Small Claims judges here are reluctant to award extra contractual damages, even when valid.

I specifically asked the carrier I wanted them to pursue subrogation for my deductible. I found a 3rd likely DOI violation related to that as follows:

Section 2695.7. Standards for Prompt, Fair and Equitable Settlements

(p) Every insurer shall provide written notification to a first party claimant as to whether the insurer intends to pursue subrogation of the claim. Where an insurer elects not to pursue subrogation, or discontinues pursuit of subrogation, it shall include in its notification a statement that any recovery to be pursued is the responsibility of the first party claimant. This subsection does not require notification if the deductible is waived, the coverage under which the claim is paid requires no deductible to be paid, the loss sustained does not exceed the applicable deductible, or there is no legal basis for subrogation.​

 

[adjusterjack]

I'm familiar with the CA regulations and, frankly, I don't see you getting any bad faith money out of this. Either go to small claims or file a complaint with the DOI, or both.

 

[fed up]

So, what is the hang up with the repair? Is it a delay in finding parts? How long has the repair taken from first estimate to completed repair? How much damage to your high end vehicle?

 

[Alan2020]

@adjusterjack - Yeah, I'll probably file a DOI complaint, since there are 2 for sure violations. Then after that file the Small Claims action. The DOI findings will just further document their poor claims handling. Pretty sure they will pay up once the suit is filed without the need to appear in court since in CA carriers do very poorly in Small Claims Court. Lawsuit will also kick the claim out of the PD only claims department that have the least experienced adjusters.