Our San Francisco insurance attorneys know how to deal with insurance companies who are wrongfully trying to deny consumer’s the benefits they paid for. We know how frightening it is to hear that an insurance claim is denied when you were counting on that money for critical expenses. But 2012 holds promise for a more fair insurance litigation environment when a company improperly denies a life insurance or disability claim thanks to a new law- California Insurance Code Section 10110.6. It is important to note this new law relates only to life insurance and disability insurance, and not other types of insurance. It was sponsored by Senator Ron Calderon with the support of California Insurance Commissioner Dave Jones, unanimously passed the Legislature and was signed by Governor Jerry Brown in October. A similar bill was vetoed by Governor Schwarzenegger in 2010.
As of January 1, insurance companies in California will no longer be able to reserve discretionary authority to the themselves to determine or interpret a policy and decide if a policyholder is entitled to benefits. It applies to all life and disability insurance policies that are issued, delivered, or renewed to a California resident starting in January. This gives discretion in these matters to judges, which is as it should be. Judges know the law and are impartial observers. It is common sense that it is unfair to have a party to the dispute- one who stands to earn money depending on the outcome- be the final arbitrator of that dispute. Insurance Commissioner Jones likened it to a “fox guarding a henhouse.” But that is exactly how these scenarios worked until the passing of this new law. Insurance companies used these discretionary clauses as a shield from liability for valid claims and therefore nullified bargained for benefits. Suing the insurance companies over inappropriately denied benefits was often useless. If the policy included a discretionary clause, the judge’s hands were tied and he or she had to assume the insurance companies acted correctly unless the policyholder could prove that the company’s denial of benefits was arbitrary or capricious. Even if a judge believed the policyholder should have received the denied benefits, unless the company was arbitrary or capricious the judge could offer no remedy to the policyholder, who was left disabled or grieving for a loved one often in dire financial straits.
As San Francisco insurance denial attorneys, we are thankful the new law addresses this obvious inequity and helps level the playing field for consumers. It stops the practice of biased insurance companies ignoring or overriding a doctor’s opinion about whether a policyholder qualifies for disability benefits based on their own greedy concerns for their profit margins.
Even with this new legal advancement, if you believe you were unfairly denied benefits by your insurance company you should contact an experienced San Francisco insurance lawyer in your area to discuss your case. These new laws and protections will not be useful to your situation if you do not have a legal representative in your corner to help you navigate the law and with the experience to see through insurance companies’ endless bag of tricks.
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