As of January 1st, 2023, new legislation is shaping how accident victims can file insurance claims in California. Governor Gavin Newsom signed Senate Bill (S.B.) 1155 into law in September 2022, which has updated the California Code of Civil Procedures to include a new chapter regulating time-limited demands. It applies to claims filed on or after the beginning of the year, regardless of when the incident occurred.
This new bill could significantly affect all California personal injury cases. Here’s what you need to know about time-limited demands, their role in insurance, and how the new legislation may affect you.
What Is a Time-Limited Demand in Insurance?
In S.B. 1155, a time-limited demand is defined as “an offer before the filing of the complaint or demand for arbitration to settle any cause of action or a claim for personal injury, property damage, bodily injury, or wrongful death made by or on behalf of a claimant to a tortfeasor with a liability insurance policy for purposes of settling the claim against the tortfeasor within the insurer’s limit of liability insurance, which by its terms must be accepted within a specified period of time.”
In other words, time-limited demands are offers made by accident victims before they file a lawsuit or other legal claim against the insurer. They are usually made because the victim believes the insurer has underpaid or unfairly denied a claim that should otherwise be covered. These demands are usually the first step to making a bad-faith claim against an insurer.
If the demand is accepted, the insurer pays the claimant’s demands, and the matter is resolved. However, if denied, the claimant can use any response issued by the insurance company within any lawsuits they choose to file moving forward. This can be invaluable for accident victims who are struggling to receive fair compensation for the injuries they’ve suffered.
Time-limited demands have been permitted for years but have not previously been regulated under California law. S.B. 1155 is intended to standardize these demands and clarify the responsibilities of claimants and insurance providers.
Should You Issue a Time-Limited Demand Against an Insurer?
Time-limited demands are not intended to be the sole or primary method of resolving insurance claims. According to California law, insurers are responsible for acting in good faith, responding to client claims promptly, and communicating regularly until the matter is resolved. If they do so, there is usually no need for a time-limited demand.
However, unscrupulous insurance companies may not act in good faith. Instead, they may refuse to communicate, unfairly deny claims, or otherwise attempt to avoid compensating accident victims for their injuries. This is considered insurance bad faith, and it is grounds for a civil lawsuit to hold the insurer accountable for failing to fulfill its contractual obligations. However, proving bad faith can be difficult. That is when a time-limited demand may be useful.
The purpose of these demands is to force insurers to respond to a claimant or potentially open themselves up to further liability. Sending a demand demonstrates that there may be legal consequences for continuing to act in bad faith. The insurer must either capitulate to the demand or reject it by the deadline, and any rejections or failure to respond can be used as evidence in a bad faith lawsuit. While insurers are free to reject demands and explain why they are doing so, S.B. 1155 ensures that claimants can hold them accountable if the rejection violates the policy.
Examples of situations in which sending a demand may be beneficial include:
- You struggle to receive timely responses from your insurer
- You do not receive a settlement offer, rejection, or an explanation of delay within 40 days
- An insurer denies your claim without providing a reason
- You receive a significantly lower settlement offer than the policy dictates
These are all potential examples of bad faith insurance practices that a demand may help resolve.
Demanding Insurance Settlements After an Accident
Once a sufficient demand has been submitted, the insurer has until the deadline it includes to accept, reject, or request more information about it. If the insurer does not respond in writing prior to the deadline, it may be considered evidence of bad faith in court. The problem for many claimants is that these demands must “substantially comply” with S.B. 1155, or the insurer may ignore them.
There are several restrictions imposed by the new regulation regarding what will be considered a “reasonable offer to settle claims,” including:
- The demand must be written
- It must be labeled clearly as a time-limited demand or reference Section 999.1 of the Civil Code
- It must provide the deadline for acceptance, which must be at least 30 or 33 days after the date of transmission for demands sent by email and mail, respectively.
- It must guarantee that the insurer will be released from all liability should the demand be accepted.
- It must include information regarding the claim, including the date of the occurrence, the claim number, a description of the harm suffered by the claimant, and evidence to support the claim.
The most effective way to produce a demand that substantially complies with the law is to consult a skilled personal injury attorney.
Seek Expert Help With Your Time-Limited Insurance Demand
If you’re considering taking legal action against an insurer because they are not acting in good faith, it is crucial to consult with an attorney. A skilled personal injury lawyer like those at Fiore Achermann can help determine whether you have grounds to file a time-limited claim in California. They can also help you draft a comprehensive demand and ensure it substantially complies with S.B. 1155.
Our California personal injury firm is dedicated to helping accident victims like you pursue just compensation for your injuries. Learn more about how we can help by calling (415) 550-0650 or reaching out online.