What Is A Policy Limit Demand In California?
Accidents can happen at any time and cause severe injury and monetary losses. In some cases, the accident will result in an insurance “policy limits demand” to the insurer covering the person or business responsible for your injury. In California, pending law changes will affect policy limit demands in Oakland and across the state. Please contact our Oakland personal injury attorneys if you need legal assistance involving policy limit demands after reviewing this article.
What Is A California Policy Limit Demand?
It is well understood in California that an insurance company should accept a reasonable policy limits demand when there is liability and damages exceed the policy. The concepts of good faith and fair dealing in insurance contracts require the insurer not to expose their client to personal liability if a claim exceeds policy limits.
California Code of Civil Procedure Sections 999-999.5
California Code of Civil Procedure sections 999-999.5, which takes effect on Jan. 1, 2023, establishes critical statutory requirements for making policy limit demands in the state. The purpose of the new law is to lay out guidelines for using time-limited demands within insurance policy limits to settle civil injury lawsuits for auto, motor vehicle, commercial, and homeowner premises liability claims before filing suit.
A time-limited demand means the following, according to C.C.P 999 (b) (2): “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.”
The California statute, Senate Bill 1155, sets the following requirements when a claimant makes a time-limited demand. The demand letter must have the following attributes:
- It must be in writing.
- It needs to be referred to as a time-limited demand.
- It must provide a minimum of 30 days to accept the demand if it is delivered by email or 33 days by regular mail.
- It should offer a clear demand to settle the claim within the insurance policy limits, and it must satisfy all liens.
- It should offer a full release of liability for the incident.
- It must provide the loss date, where the loss happened, and the claim number, if it exists.
- It must offer a description of all known personal injuries that the claimant sustained.
- Finally, it must offer proof of the civil claim and damages and can include medical bills and records.
When the insurance company receives the policy limit demand, it is authorized by the new law to ask for more information or clarification. Making such a request does not mean there has been a counteroffer or demand rejection. If the insurance company opts to reject the demand, the claimant must be informed in writing before the demand expires and the insurer must state its grounds for rejecting the demand.
California Policy Limit Demand Frequently Asked Questions
What is a policy limit demand?
A policy limit demand is a formal request made by a claimant to an insurance company to settle a claim for the full amount of the policy limits. This is often used in personal injury cases to expedite the settlement process and potentially hold the insurer liable for the full amount if they unreasonably deny the demand.
What is the new California statute regarding policy limit demands?
Effective January 1, 2023, California Code of Civil Procedure sections 999-999.5 (Senate Bill 1155) sets forth statutory requirements for time-limited policy limit demands. This includes specific guidelines on how the demand must be made and responded to.
What must a policy limit demand include?
The demand must be labeled as a time-limited demand, provide at least 30 days to accept if sent by email or 33 days if sent by mail, include a clear offer to settle all claims within policy limits, offer a complete release from liability, provide the date and location of the loss, the claim number, a description of injuries, and reasonable proof of the claim and damages.
How does the new statute affect insurers?
Insurers must respond to policy limit demands within the specified timeframe and can seek clarification or request an extension if needed. Failure to respond appropriately can lead to bad-faith claims against the insurer.
What happens if the insurer rejects the policy limit demand?
If the insurer rejects the demand, they must notify the claimant in writing before the expiration of the demand period, providing the basis for the rejection. The claimant can then proceed with litigation, potentially holding the insurer liable for the full amount of the claim.
Can a policy limit demand be made after a lawsuit is filed?
No, a policy limit demand must be made before the filing of a lawsuit or a demand for arbitration.
What are the benefits of making a policy limit demand?
Making a policy limit demand can expedite the settlement process and potentially open the policy, allowing the claimant to recover the full policy limits if the insurer unreasonably denies the demand.
What should claimants consider when making a policy limit demand?
Claimants should ensure the demand is clear, includes all necessary information, and is sent to the correct address designated by the insurer. They should also be prepared to provide additional information or documentation if requested by the insurer
Contact Our Oakland Personal Injury Attorneys Now
If you were injured in an Oakland accident, you may be overwhelmed with bills and uncertainty. Perhaps you have lost months of income and have piles of medical bills on the table. What can you do regarding a policy limit demand in your case?
The Oakland personal injury attorneys Bracamontes & Vlasak, P.C., have the experience and knowledge to get you the compensation you deserve. Contact our personal injury lawyers for a complimentary consultation at (415) 835-6777. Our attorneys serve people who have been injured in Oakland, the Bay Area, and Northern California.
(Updated 12/2/2024)
