Insurance companies are in business to make a profit. The more they take in in premium and the less they pay out in claims, the more profit they make. While many disputed claims are made in good faith based on policy coverages and exclusions, some are not. When an insurance company denies a claim without a valid reason for doing so, it may be liable for damages that may include attorney’s fees for litigating the dispute and in appropriate cases, punitive damages.
Insurance policies are typically written in very broad and general terms. Many of these terms are defined in the policy, but some important terms are not. Undefined words are interpreted in the manner in which the words or phrases are commonly used. Courts will interpret insurance policies in a manner consistent with that in which a policyholder or insured would have reasonably understood the policy. If there are ambiguities, these are resolved by the courts in favor of coverage. Consistent with this doctrine, policy exclusions are strictly and narrowly construed against the insurer.
Insurance companies also have the obligation to defend any legal action commenced the insured which carries potential liability under the policy, regardless of whether the claims are likely to succeed, even if there are uncovered claims made in the same action. If they fail to defend the action, they may be liable not only for covered claims, but for other uncovered claims and for coverage amounts exceeding the limits of the insurance policy. |
The Law Office of Benjamin Blakeman is a civil litigation practice with particular emphasis on life insurance, annuities, securities, investment and broker/financial advisor liability issues in Los Angeles, California and surrounding areas including Beverly Hills, West Hollywood, Santa Monica, Pasadena, Culver City, Encino, Woodland Hills, Manhattan Beach, Burbank, Hermosa Beach, Toluca Lake, Brentwood, Westwood, Bel Air and Sherman Oaks.