As January 2023 dawns, a new law is taking effect in The Golden State that will affect insurers, injury victims, and policyholders of auto, homeowner, and commercial premises liability insurance coverage. This law specifically concerns time-limited demands. As an experienced Simi Valley, CA personal injury lawyer – including those who practice at The Law Offices of Barry P. Goldberg – can confirm, the term “time-limited demands” is one that not a lot of people are familiar with until something challenges causes them to file a claim and suddenly this term becomes a critically consequential issue.
In a nutshell, attorneys representing policyholders have traditionally sent time-limited insurance policy limit demand letters in an effort to seek maximum compensation on behalf of their clients. At a glance, this seems like a savvy and reasonable advocacy tool. Yet, the ways in which these letters are structured and processed have led many insurance carriers to simply reject such letters and “roll the dice” regarding how the party initiating the letter will respond.
Why Does This Matter?
Because time-limited demand letters are sent to an insurer before a policyholder or other interested party files either a demand for arbitration or a lawsuit, an insurance company’s response to this communication affects the likelihood that a claimant will need to navigate the costs and stresses associated with litigation in an effort to secure a fairly-valued settlement.
If insurance companies feel increasingly empowered to respond to demand letters – instead of rejecting them and rolling the dice – more injury victims, homeowners, and business owners may be able to receive fairly-valued compensation as settlement offers without ever needing to initiate a contentious legal process.
What Does the New Law Do?
California Senate Bill 1155 clarifies the ways in which time-limited demands may be made when lawyers and insurance providers are attempting to settle claims for auto, homeowner, and commercial premises liability claims. The nature of a time-limited demand letter is such that its terms must either be accepted or rejected within specific timeframe. The new law will help to ensure that more of these letters are ultimately accepted by insurance companies.
Per the new law, the terms of a time-limited demand letter must clearly offer to settle any claims in question within policy limits and provide an insurance company with a minimum of 30-to-33 days (depending on whether it’s transmitted via postal mail or email) to accept the demand before further action will be taken. It must also provide specific information about the circumstances related to the claim and reasonable proof supporting its legitimacy. If an insurance company rejects a demand, it must provide – in writing – the basis for its decision.
These adjustments to the legal requirements that must be honored when time-limited demand letters are sent (and if/when they are ultimately rejected) will hopefully help more injury victims and policyholders settle their claims quickly and effectively. They will also help to ensure that when demands are rejected, those submitting them understand why.