Insurance Bad Faith After Natural Disasters: What to Know
Understanding the basics of insurance claims after catastrophic losses is important, especially if you encounter insurance bad faith. Here's what to do if that happens.

The recent wildfires in Southern California and natural disasters elsewhere in the country have left thousands of people grappling with enormous loss — and the complex insurance claims process that follows.
Insurance companies owe a duty of good faith and fair dealing with policyholders. Unfortunately, some carriers are notorious for using unfair, manipulative and deceptive practices to delay, deny or minimize payouts of valid claims through unethical or illegal means. This is known as insurance bad faith — and it is crucial to be on the lookout for these tactics as you begin to rebuild your life.
While I do not recommend immediately hiring an attorney, under some circumstances — such as when bad-faith tactics are suspected — there is no choice. This is where lawyers experienced in bad-faith insurance practices are worth their weight in gold.

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It never hurts to schedule a consultation, even at the very beginning, as a lawyer can help clarify your insurance coverages and be ready to help if it turns out that your carrier isn’t playing by the rules.
After attending Loyola University School of Law, H. Dennis Beaver joined California's Kern County District Attorney's Office, where he established a Consumer Fraud section. He is in the general practice of law and writes a syndicated newspaper column. "I love law for the reason that I can help people resolve their problems," he says. "I know it sounds corny, but I just love to be able to use my education and experience to help — simply to help. When a reader contacts me, it is a gift."
But as I stated in an earlier column, How to Deal With Property Insurance Claims After Wildfires, unless your carrier has flat out denied the loss or you suspect bad faith, allow the claims process to proceed and do not rush to retain an attorney, as the expense might not yet be justifiable.
I spoke with a friend of this column, Los Angeles attorney Shant Karnikian, managing partner and trial attorney with one of our country’s leading bad-faith law firms, Kabateck LLP. He addressed the following important points for how to proceed with an insurance claim and avoid common pitfalls.
- Get a copy of your policy. Whatever renters or homeowners insurance you have, contact your carrier to obtain a copy of the complete policy. Review it in detail to ensure you understand your coverage limits, deductibles and specific provisions related to the damage. Don’t forget to check other relevant policies, such as auto insurance or umbrella insurance.
- Document everything. When you can visit your home, take photos and videos of all the damage. You may need professional help, such as appraisers and structural engineers, to assess the full extent of the damage. An attorney can help connect you with the proper experts if necessary, but don’t be in a hurry to incur avoidable expenses. Allow the claims adjusters to do their work. Businesses should document all business losses and interruptions related to the incident.
- Save all receipts. You’ll need proof of whatever expenses you incur related to the disaster.
- Keep a diary. Take detailed notes and save records of every interaction with your insurer — letters, emails, calls, phone numbers, dates and times, names of the representatives you’ve spoken with and so on.
- Prioritize your health. Don’t return to your property until authorities have said it’s safe to do so.
- Secure affordable temporary housing. Most homeowners/renters policies cover a period of additional living expenses (ALE) for housing while you are displaced.
- Follow proof of loss requirements and meet all deadlines. Many insurance policies have strict policies and timeframes for reporting damage and filing claims.
- Stay on top of your insurance company. After filing, follow up on a regular basis to ensure your claim is being processed and that you have completed the requirements and provided all necessary information.
- Don't jump at your carrier's first offer. Do not feel pressured to accept an initial assessment or lowball offer, especially if you have not obtained a second opinion on valuation. Do not sign a release when accepting periodic payments.
- Don't rush into contracts. Don't sign contracts for repairs, rebuilds, clean-up/debris removal and so forth before you know the status of your claim. Be on the lookout for scammers targeting disaster victims.
- Inquire about resources. You may qualify for assistance through FEMA and/or the Small Business Administration (SBA).
Consulting with an attorney
Seeking advice early in the process from an attorney experienced with property losses — before filing your claim — is advisable, but ethical lawyers will not rush to sign you up unless it becomes clear that you are being dealt with improperly.
If you do encounter bad-faith tactics, a lawyer can advocate for you, analyze and address every aspect of your claim, help you build a strong case, identify overlooked benefits, navigate disputes with your insurer, ensure your rights are protected and help maximize your claim — but only when it is necessary, as avoidance of unnecessary attorney fees is crucial.
How to recognize bad-faith practices
I asked Karnikian to describe what insurance bad faith looks like. He said that insurance bad faith comes in many forms, including:
- Failure to respond to a claim promptly
- Refusal to communicate
- Lack of reasonable standards for prompt investigation or processing of a claim
- Failing to conduct a fair investigation
- Requiring unreasonable proof of a loss
- Misrepresenting terms and policy provisions
- Denying policy benefits without a clear or valid explanation
- Nondisclosure of limitations or exclusions when the policy was sold, or including those in the “fine print”
- Delaying decisions and resolution — failure to approve or deny a claim in a reasonable time period after the loss is submitted
- Pressuring policyholders to accept a low-ball offer
- Forcing the insured to litigate the claim because the insurer refuses to make an adequate settlement offer
- Advising policyholders against retaining a lawyer
- Threatening policyholders to compel acceptance of an unreasonable settlement offer
If you believe your insurer is using bad-faith tactics to resist paying a valid claim, you can file a complaint with your state’s Department of Insurance, which will conduct an investigation and has the authority to impose penalties and fines on companies for violations.
In addition, depending on your circumstances, you may be entitled to pursue a bad-faith insurance claim in court to recover compensation and hold the insurance company accountable for its breach of contract.
A successful claim can help you gain compensation for:
- Contract damages. The amount of wrongfully denied benefits, plus interest.
- Extra-contractual damages. Other significant economic losses, as well as mental and emotional distress caused by your insurance company's failure to fulfill its contractual obligations, including attorney fees.
- Punitive damages. Generally reserved for extreme bad-faith cases and considerably more difficult to prove, punitive damages can be awarded to punish the at-fault party.
Proving insurance bad faith after a natural disaster can be very involved.
Your lawyer can help you build the strongest possible case to demonstrate that your insurer acted unreasonably and without proper cause.
“Lawyers who care will try every way possible to keep their clients out of court,” Karnikian says. “We are here to listen and help.”
Dennis Beaver practices law in Bakersfield, Calif., and welcomes comments and questions from readers, which may be faxed to (661) 323-7993, or e-mailed to Lagombeaver1@gmail.com. And be sure to visit dennisbeaver.com.
Related Content
- California Wildfires and Insurance: Looking for Help
- California's Home Insurance Crisis: Rising Risks, Soaring Costs and Limited Options
- How to Protect Your Home from Natural Disasters with the Right Insurance
- IRS Extends California Tax Deadline for Wildfire Victims: What to Know
- California Fires: How to Recover Tax Records and Other Important Documents
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After attending Loyola University School of Law, H. Dennis Beaver joined California's Kern County District Attorney's Office, where he established a Consumer Fraud section. He is in the general practice of law and writes a syndicated newspaper column, "You and the Law." Through his column, he offers readers in need of down-to-earth advice his help free of charge. "I know it sounds corny, but I just love to be able to use my education and experience to help, simply to help. When a reader contacts me, it is a gift."
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