California Insurance Bad Faith & SIU Plaintiff's Lawyer
Insurance policies are meant to provide protection when something goes wrong. When an insurance company refers your claim to its Special Investigations Unit, unreasonably delays, denies, or underpays a valid claim, that conduct may give rise to a bad faith claim under California law.
Bad faith claims arise when an insurer fails to meet its legal obligation to act fairly and in good faith toward its policyholder. This can occur in both first-party claims such as UM/UIM or property damage and third-party liability situations where an insurer fails to properly protect its insured.
Kantzabedian Law Firm represents individuals and policyholders in insurance bad faith and SIU investigation matters throughout Los Angeles County and across California. We speak English, Spanish, and Armenian.
My Claim Was Referred to SIU — What Does That Mean?
When an insurance company refers a claim to its Special Investigations Unit — commonly known as SIU — it means the insurer has flagged the claim for further scrutiny before paying it. Receiving an SIU referral does not mean you have done anything wrong. Many valid claims are referred to SIU as a matter of routine, and insurers often use SIU investigations as a delay tactic to avoid or minimize paying legitimate claims.
During an SIU investigation, the insurer may:
- Request recorded statements from you or witnesses
- Demand extensive documentation of your injuries and losses
- Conduct surveillance of your activities
- Review your prior claims history
- Interview medical providers, employers, or other third parties
- Hire outside investigators to monitor and report on your daily life
SIU investigations can last anywhere from 30 days to well over a year. During this time your claim is effectively frozen — no payments, no resolution, and often little communication from the insurer about the status of the investigation. If you have received notice that your claim has been referred to SIU, speaking with an attorney as early as possible can help protect your rights and prevent the insurer from using the investigation process against you.
When Does an SIU Investigation Become Bad Faith?
Not every SIU referral constitutes bad faith — but many do. Under California law, insurers must conduct investigations that are reasonable in scope and duration. When an insurer uses SIU as a pretext to delay or deny a legitimate claim, that conduct may give rise to a bad faith claim.
Common signs that an SIU investigation has crossed into bad faith territory include:
- The investigation has lasted an unreasonable amount of time without resolution
- The insurer has failed to communicate the status of the investigation
- The insurer is requesting documentation that has no legitimate relevance to the claim
- The insurer denied the claim without providing specific written reasons
- The insurer ignored medical evidence or other documentation supporting the claim
- The investigation appears designed to harass or pressure the claimant rather than evaluate the claim
- The insurer misrepresented policy terms or coverage during the investigation
If any of these apply to your situation, the insurer's conduct may go beyond a legitimate investigation and into actionable bad faith.
What Is Insurance Bad Faith?
Under California law, insurance companies owe a duty of good faith and fair dealing to their insureds. This means they must:
- Conduct a reasonable investigation
- Evaluate claims fairly
- Communicate promptly
- Avoid unnecessary delays
- Pay valid claims within a reasonable time
- Not use SIU as a pretext to delay or deny legitimate claims
When an insurer fails to meet these obligations — whether through an abusive SIU process or otherwise — it may be liable for bad faith.
Common Bad Faith Scenarios
Bad faith claims often arise from situations such as:
- Referral to SIU without legitimate basis
- Unreasonable delay in completing an SIU investigation
- Unreasonable denial of a valid claim following SIU investigation
- Delays in investigating or processing a claim
- Failure to properly evaluate medical evidence
- Low settlement offers that do not reflect the claim value
- Misrepresentation of policy terms or coverage
- Failure to defend or indemnify in liability cases
- Refusal to settle within policy limits when appropriate
These issues often occur after an injury claim has already been made and can significantly compound the harm to the policyholder.
Why Bad Faith Claims Are Different
Bad faith cases differ from standard injury claims because they focus on the conduct of the insurance company — not just the underlying accident or loss. These cases often involve:
- Internal claims handling practices and SIU referral protocols
- Claims file documentation and adjuster communications
- Industry standards for claims handling and SIU investigations
- Expert evaluation of insurer conduct
- Additional damages beyond the original claim
In California, bad faith claims can expose insurers to damages beyond policy limits in certain circumstances.
Types of Bad Faith Claims
Bad faith claims may include:
- First-party bad faith — claims under your own policy including UM/UIM and property damage
- Third-party bad faith — failure to defend or settle claims against the insured
- Bad faith SIU investigations — using the investigation process to delay or deny valid claims
- Failure to settle within policy limits
- Improper denial or delay of benefits
Each type of claim involves different legal standards and proof requirements.
Common Damages in Bad Faith Cases
In addition to the underlying policy benefits, compensation in a bad faith claim may include:
- The full value of the underlying claim that was delayed or denied
- Economic losses caused by the denial or delay
- Emotional distress
- Attorney's fees in certain situations
- Punitive damages, where the conduct is particularly egregious
These damages reflect the insurer's conduct — not just the original loss — and in cases involving serious bad faith can significantly exceed the value of the underlying claim.
How These Cases Are Handled
Bad faith and SIU cases require a detailed review of the insurer's actions from the beginning, including:
- Reviewing claim files, SIU referral documentation, and communications
- Evaluating the investigation process and its duration
- Analyzing delays, denials, and settlement decisions
- Comparing conduct against industry standards for claims handling and SIU investigations
- Working with experts when appropriate
- Preparing for litigation when necessary
Each case is handled with an understanding of how insurers evaluate, defend, and attempt to minimize claims — and what it takes to hold them accountable.
Insurance Bad Faith & SIU Investigation Cases Throughout California
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