Consequential Damages for Wrongful Insurance Claim Denials
Insurance policies are supposed to provide peace of mind and financial protection in times of need. However, when an insurance company wrongfully denies a claim, policyholders can face significant financial and emotional distress. In California, policyholders have the right to seek not only the value of the denied claim but also consequential damages that arise from the insurer’s bad faith actions. Understanding consequential damages and how they apply to wrongful insurance claim denials is crucial for policyholders seeking justice. Below we explain what consequential damages are and how to include them in your claim. If you believe your health, life or disability insurance claim was wrongfully denied, contact Gianelli & Morris to review your case with a skilled and experienced California bad faith insurance lawyer.
Understanding Consequential Damages
Consequential damages, also known as special damages, refer to losses that occur as a direct result of an insurer’s wrongful denial of a claim. These damages go beyond the immediate financial loss and encompass broader impacts on the policyholder’s life. In the context of wrongful insurance claim denials, consequential damages can include:
-
Economic Losses: These are financial damages that arise from the denial of the claim. For example, if a disability insurance claim is wrongfully denied, the policyholder may suffer lost wages, medical expenses, or costs associated with hiring caregivers.
-
Additional Out-of-Pocket Expenses: Policyholders may incur additional costs due to the denial of their claim. In the context of health insurance claim denials, for instance, this category could include costs to pay for the denied treatment or an alternative treatment, or medical expenses for a worsening condition left untreated.
-
Loss of Creditworthiness: If a claim denial leads to financial instability, policyholders may face damaged credit scores, making it more difficult to secure loans or other financial assistance in the future.
Legal Basis for Consequential Damages in California
In California, the legal framework for seeking consequential damages is rooted in the implied covenant of good faith and fair dealing inherent in every insurance contract. This covenant requires insurers to act in good faith and deal fairly with policyholders, avoiding actions that would deprive them of the benefits of their policy. When an insurer breaches this duty, it can be held liable for not only the denied claim but also any consequential damages resulting from its bad faith conduct.
California courts have consistently upheld the right of policyholders to seek consequential damages in cases of bad faith insurance practices. For instance, in the landmark case of Gruenberg v. Aetna Insurance Co., the California Supreme Court recognized that an insurer’s wrongful conduct can give rise to damages for “severe economic damage…loss of earnings and various special damages.”
Proving Consequential Damages
To successfully claim consequential damages, policyholders must demonstrate that the insurer’s bad faith denial of their claim directly caused their additional losses. This involves documenting financial losses. Policyholders should maintain detailed records of all economic losses, including medical bills, receipts for out-of-pocket expenses, and evidence of lost wages. In addition, it is crucial to establish a clear link between the insurer’s actions and the consequential damages suffered. Showing causation often requires expert testimony or detailed documentation demonstrating how the wrongful denial directly led to the additional losses.
Seeking Legal Assistance
Navigating the complexities of an insurance bad faith claim and proving consequential damages can be challenging. Policyholders facing wrongful claim denials should consider seeking legal assistance from experienced insurance law attorneys. At Gianelli & Morris, we restrict our legal practice to representing policyholders whose disability, life, or health insurance claims have been denied in bad faith. Our dedicated team understands the tactics used by insurance companies and is committed to holding them accountable for their actions.
Contact Gianelli & Morris for Help Recovering Consequential Damages After a Bad Faith Insurance Claim Denial in California
When an insurance company wrongfully denies a claim, the repercussions can extend far beyond the immediate financial loss. Consequential damages provide a vital means for policyholders to seek full compensation for the broader impact of an insurer’s bad faith conduct. By understanding their rights and seeking experienced legal counsel, policyholders can take steps to secure the justice and compensation they deserve. If you believe your insurance claim has been wrongfully denied, contact Gianelli & Morris today at 213-489-1600 for a free consultation. We are here to fight for your rights and help you navigate the complexities of your insurance claim.
