A California insurance bad faith injury case can start with something as small as a single missed phone call. Our client was 24 years old, riding his motorcycle in October 2009, when a driver made a right turn from the wrong lane and hit him. He was left paraplegic. He would never walk again. What happened next, and what an insurance company failed to do about it, turned a $100,000 insurance policy into a judgment worth nearly $14 million.
$13.8M
Federal jury bad-faith judgment against Allstate
$100K
Policy limit the insurer approved but never paid on time
15 min
Meeting where the insurer agreed to pay, then did nothing
The driver who hit our client was insured through Allstate, with a policy limit of $100,000. Our client's lawyer sent Allstate everything the company needed to settle the case quickly and fairly: medical records, wage-loss documentation, a reasonable deadline, and an offer to accept exactly what the policy provided. This was not a complicated ask. It was the kind of straightforward policy-limits demand insurance companies receive and resolve all the time.
Allstate's own executives met to discuss the demand. In just 15 minutes, they agreed to pay the full $100,000. Then they did nothing. They never told our client's lawyer. They never sent the check. They never even told their own policyholder that the money had been approved. The deadline our client's lawyer had set came and went, with Allstate having quietly decided to pay and then simply failing to act on that decision. Because the settlement window closed without any response, the case went to trial against the driver and his mother. In October 2012, a jury awarded our client $10 million.
Once the driver and his mother assigned their bad-faith claim to our client, the case against Allstate turned on the company's own conduct.
At trial, attorney Arash Homampour got Allstate's own witnesses to admit what had happened: the company had approved full policy limits in a 15-minute meeting and then simply let the clock run out without telling anyone who needed to know.
One of the most striking facts to emerge at trial came from the driver's own mother, who testified that the lawyer Allstate had hired to defend her family in the underlying case told her the family should sue Allstate because of how badly the company had mishandled the settlement.
Facing a $10 million judgment their $100,000 policy never came close to covering, the driver and his mother assigned their bad-faith claim against Allstate to our client, allowing him to pursue Allstate directly for what it had done to all of them.
The jury credited that evidence and held Allstate responsible for the full judgment.
Under California law, when an insurance company unreasonably refuses to settle a claim within its policy limits, and the case then produces a larger judgment at trial, the insurance company can become responsible for the entire judgment, not just the original policy amount. This rule exists because an insurer's core obligation to its own policyholder includes trying to settle a claim within limits when liability is clear and damages are likely to exceed the policy, precisely so the policyholder is not left personally exposed to a judgment the insurer could have avoided. California's Unfair Claims Settlement Practices statute identifies failing to attempt in good faith to effectuate a prompt, fair, and equitable settlement as one of the specific practices that can support a bad-faith claim against an insurer.
With post-judgment interest accumulating while Allstate continued to avoid responsibility, the $10 million judgment grew to approximately $13.8 million by the time the bad-faith case against Allstate went to trial. In November 2015, a jury in the U.S. District Court for the Central District of California decided Allstate had to pay every dollar of it. The jury did not award punitive damages on a separate fraud theory our client's legal team also pursued, finding for Allstate on that specific claim. That did not change the core result. Allstate still had to pay the full $13.8 million bad-faith judgment because it failed to settle within its policy limits when it had a clear opportunity to do so. Prior results do not guarantee a similar outcome. The Homampour Law Firm handles bad-faith and personal injury matters on a contingency fee basis, meaning there is no fee unless we recover for you.
The breakdowns below cover the insurer delay tactics that create bad-faith exposure, the unfair claims practices defined by Insurance Code 790.03, and why a jury can return a full compensatory verdict while declining to add punitive damages.
Punitive damages standard
We try policy-limits and bad-faith cases against insurers as counsel or co-counsel and pay statutory referral fees.
Refer a caseA California insurance bad faith injury case arises when an insurance company fails to deal fairly and honestly with a claim it has a duty to handle properly. When liability is clear and damages are likely to exceed the policy limits, an insurer must try to settle within those limits, and if it unreasonably refuses and a larger judgment results, it can become responsible for the entire judgment.
In November 2015, a jury in the U.S. District Court for the Central District of California awarded $13.8 million against Allstate, representing the underlying $10 million verdict plus post-judgment interest that accrued while Allstate refused to pay.
No. The jury considered a separate fraud theory related to Allstate's verbal-only approval and found for Allstate on that specific claim, declining to award punitive damages. The core $13.8 million bad-faith judgment stood regardless.
