Insurer delay tactics California bad faith litigation frequently exposes are not always dramatic denials. Sometimes the most damaging conduct is silence: an insurance company that internally decides to pay a claim and then simply never communicates that decision, allowing a settlement deadline to pass without any explanation to the people waiting on an answer.
$13.8M
Bad-faith judgment traced to an uncommunicated settlement approval
15 min
Internal meeting that approved a settlement that was never sent
California law recognizes that an insurer's obligation to its policyholder includes affirmatively attempting to settle a claim within policy limits when liability is reasonably clear and the potential damages exceed those limits, and California's Unfair Claims Settlement Practices statute lists failing to attempt in good faith to effectuate a prompt, fair, and equitable settlement among the specific practices that can expose an insurer to liability. An insurer cannot satisfy this obligation by internally approving a settlement and then failing to communicate it. Once a company has effectively decided to pay a claim, allowing a deadline to lapse without informing the claimant's attorney, the policyholder, or anyone who could act on that decision, is itself powerful evidence of unreasonable conduct. It shows the failure was not a close judgment call about liability or value. It was a pure communication and process failure inside the company.
When an insurer's own witnesses testify that a settlement was internally approved, whether through a claims committee, an executive review process, or a supervisor sign-off, but the approval never translated into a check, a phone call, or a letter, that testimony often becomes the centerpiece of a bad-faith trial. It removes the insurer's ability to argue it was reasonably evaluating a disputed claim, because the company's own records or testimony show it had already reached a conclusion. The only question left is why that conclusion never reached the outside world in time.
Attorneys building an insurer delay bad-faith case should reconstruct the timeline in detail: the date the settlement demand was sent, the specific deadline given, any internal claims notes referencing review or approval, the date internal approval occurred, and the date the deadline passed without a response.
Depositions of the claims adjuster, supervisor, and any committee members can reveal internal approvals that never appear in writing, and inconsistencies between witnesses about who was supposed to communicate the decision, and to whom, can become some of the most persuasive evidence at trial.
A policyholder describing never being told a settlement had been approved, and having to face a judgment they were left completely unprotected from, adds a human dimension a jury can understand independent of the technical insurance concepts at issue.
Any case involving a lapsed settlement deadline should be evaluated for evidence of internal insurer approval or evaluation that never reached the claimant, since that gap between internal decision-making and external communication is often where the strongest bad-faith evidence lives.
The case behind this page
How a settlement approved in 15 minutes and never sent grew into a $13.8 million bad-faith judgment.
Read the full caseThe governing statute
The prohibited practices that define what prompt, good-faith claims handling should look like.
See the statuteRelated breakdowns from this case and our insurance bad-faith practice.
We take policy-limits and delay-based bad-faith cases as counsel or co-counsel and pay statutory referral fees.
Refer a caseCommon delay tactics include failing to respond to settlement demands within a reasonable time, requesting unnecessary documentation to slow the process, or in the most damaging cases, internally approving a settlement decision without ever communicating it to the claimant or policyholder before a deadline passes.
When an insurer's own records or testimony show it had already decided to pay a claim, but failed to communicate that decision in time, it eliminates the insurer's ability to argue it was still reasonably evaluating the claim. The failure becomes a pure communication and process breakdown rather than a legitimate coverage dispute.
No. A bad-faith claim under California law generally requires showing the insurer acted unreasonably in handling the claim, which can include unreasonable delay or failure to communicate, without necessarily requiring proof of malicious intent, though intentional conduct can support additional claims in some cases.
