Know Your Rights
California Insurance Rules & Regulations
California has some of the strongest policyholder protections in the country. These statutes and regulations define exactly what your insurance company must do — and what they are prohibited from doing — when you file a claim. Understanding these rules is the single most effective way to hold your insurer accountable.
Legal Disclaimer
The information on this website is for general educational purposes only and does not constitute legal advice. Insurance laws and regulations vary by state and change over time. For help with claim negotiation and documentation, consult a licensed Public Adjuster. For legal advice specific to your situation, consult a licensed attorney. For professional claims assistance, contact us for a free consultation.
The descriptions below are plain-language summaries intended for educational purposes. They are not verbatim regulatory text. For the exact statutory or regulatory language, consult the California Insurance Code and California Code of Regulations directly.
California Insurance Code Section 790 — Unfair Claims Settlement Practices
Insurance Code Section 790.03(h) is the foundation of claims-handling law in California. It lists specific practices that are defined as unfair or deceptive claims settlement practices. However, it is important to understand the legal landscape: under Moradi-Shalal v. Fireman's Fund (1988), there is no private right of action directly under Section 790.03. A policyholder cannot sue an insurer solely for violating this statute. Instead, violations of Section 790.03 serve as powerful evidence of bad faith in a claim for breach of the implied covenant of good faith and fair dealing. CDI enforcement actions under Section 790 typically require a showing that the insurer engaged in these practices as a general business pattern, though individual violations can still support a bad faith claim and form the basis of a CDI complaint.
Think of Section 790 as the "thou shalt not" list for insurance companies. The regulations in 10 CCR 2695 (covered below) fill in the details — specific timelines, documentation requirements, and procedures — but Section 790 is where the statutory teeth are.
Misrepresenting Policy Provisions
Insurers cannot misrepresent relevant facts or policy provisions relating to the coverage at issue. This includes telling you something isn't covered when it is, or misquoting your policy limits, deductibles, or conditions.
Why this matters: This is one of the most common violations. If an adjuster tells you 'your policy doesn't cover that' without pointing to a specific exclusion, or if they mischaracterize what your policy says, they are breaking the law.
Failing to Acknowledge Communications Promptly
Insurance companies must promptly acknowledge and respond to communications from policyholders about their claims. Ignoring calls, emails, or letters is a statutory violation.
Why this matters: When your adjuster goes silent for weeks, that is not just bad customer service — it is a violation of California law. Document every unanswered call and email. The paper trail matters.
Failing to Adopt Reasonable Investigation Standards
Insurers must adopt and implement reasonable standards for the prompt investigation and processing of claims. They cannot simply sit on your claim or conduct a superficial review.
Why this matters: A drive-by inspection that misses half the damage, or an adjuster who never even enters the house, is not a reasonable investigation. You have the right to a thorough, competent evaluation of your loss.
Refusing to Pay Claims Without Investigation
Insurers cannot refuse to pay claims without conducting a reasonable investigation based upon all available information.
Why this matters: If your claim gets denied and the insurer never sent an adjuster, never requested your documentation, or never reviewed your policy — that denial is on shaky legal ground.
Not Attempting Good-Faith Settlement
Insurers must attempt in good faith to effectuate prompt, fair, and equitable settlements of claims in which liability has become reasonably clear.
Why this matters: Once the insurer knows your loss is covered and has enough information to determine the amount, they must make a genuine effort to settle. Dragging their feet at this stage is a violation.
Compelling Litigation Through Lowball Offers
Insurers cannot compel policyholders to institute litigation to recover amounts due by offering substantially less than the amounts ultimately recovered.
Why this matters: If the insurer offers you $40,000 and you eventually recover $120,000 at trial, that gap is strong evidence of a violation — particularly if it suggests the lowball offer was intended to pressure you into litigation rather than pay what was owed. This provision protects you from being coerced into accepting unfair settlements.
Requiring Duplicative Proof of Loss Submissions
Insurers cannot delay the investigation or payment of claims by requiring a preliminary claim report and then subsequently requiring formal proof of loss forms that contain substantially the same information.
Why this matters: Some carriers ask for the same documentation in multiple formats — first a preliminary report, then a formal sworn proof of loss with identical information. This is a delay tactic, and it is a statutory violation.
Attempting to Settle for Less Than a Reasonable Person Would Expect
Insurers cannot attempt to settle a claim for less than the amount a reasonable person would expect to receive based on reading the insurance policy issued to them.
Why this matters: Your policy language defines what you are owed. If the coverage described in your policy supports a significantly higher recovery than what the insurer offers, this provision gives you leverage.
Attempting to Settle Based on Altered Application
Insurers cannot attempt to settle a claim on the basis of an application that was altered without the knowledge or consent of the insured.
Why this matters: If the insurer tries to use information on your application that you never provided or agreed to, that's a violation. Always keep a copy of your original application.
Not Providing Proof of Loss Forms and Instructions
Insurers must provide necessary forms, instructions, and reasonable assistance to policyholders so they can comply with policy conditions, including proof of loss requirements.
Why this matters: Your insurer cannot demand a sworn proof of loss and then refuse to provide the form or explain how to complete it. They must help you through the process, not set traps.
Appealing Arbitration Awards to Coerce Lower Settlements
Insurers cannot make known to insureds or claimants a practice of appealing from arbitration awards in favor of the insured for the purpose of compelling them to accept settlements or compromises less than the amount awarded in arbitration.
Why this matters: If a carrier routinely appeals appraisal or arbitration awards as a pressure tactic — hoping you will settle for less rather than endure more delays — that practice itself is a statutory violation.
Failing to Provide Settlement Information
Insurers must promptly provide a reasonable explanation of the basis in the insurance policy, in relation to the facts or applicable law, for any denial of a claim or offer of a compromise settlement.
Why this matters: Transparency is required. You have the right to understand exactly how the insurer arrived at their number — what they included, what they excluded, and why.
10 CCR 2695 — California Fair Claims Settlement Practices Regulations
Title 10, California Code of Regulations, Section 2695 is the regulatory companion to Insurance Code Section 790. While Section 790 says what insurers cannot do, 10 CCR 2695 spells out exactly what they must do — specific deadlines, documentation requirements, and procedures for handling every step of a claim.
These regulations are enforced by the California Department of Insurance (CDI). When you file a CDI complaint, the investigator may check your insurer's conduct against these specific sections. Knowing these rules lets you cite the exact regulation your insurer violated — which is far more powerful than a general complaint that they were "unfair."
Representation of Policy Provisions and Benefits
Every insurer must disclose to the claimant all benefits, coverage, time limits, or other provisions of the policy that may apply to the claim. When additional benefits might reasonably be payable upon receipt of additional proofs of claim, the insurer must immediately communicate that fact and assist the insured.
Why this matters: If your policy has coverage you don't know about — additional living expenses, ordinance or law, debris removal — the insurer is required to tell you. They cannot sit on benefits you are entitled to and hope you never ask.
15-Day Acknowledgment Deadline
Upon receiving notice of claim, every insurer must immediately — but in no event more than 15 calendar days later — acknowledge receipt of the claim. The acknowledgment must include the name of the person handling the claim and how to contact them.
Why this matters: If you file a claim and hear nothing back within 15 days, the insurer has already violated the regulations. Start your documentation clock from day one.
Responding to Policyholder Communications
Upon receiving any communication from a claimant regarding a claim that reasonably suggests a response is expected, the insurer must immediately — but in no event more than 15 calendar days later — furnish a complete response based on the facts then known.
Why this matters: This goes beyond just acknowledging receipt. If you ask a question, send documentation, or request an update — and a reasonable person would expect a reply — the insurer must respond within 15 days. Silence is a violation.
Thorough Investigation Required
Every insurer shall conduct and diligently pursue a thorough, fair, and objective investigation and shall not persist in seeking information not reasonably required for or material to the resolution of a claim dispute.
Why this matters: A competent investigation means the adjuster actually inspects your property, reviews your documentation, consults experts where needed, and evaluates the full scope of your loss — not just the parts that are easy or cheap to repair.
40-Day Decision Deadline
After receiving proof of claim, the insurer must accept or deny the claim — in whole or in part — within 40 calendar days. If more time is needed, they must notify you in writing every 30 days with the reasons for the delay.
Why this matters: The 40-day clock starts once you submit your proof of loss or other claim documentation. If the insurer just sits on it without a decision or written explanation, they are in violation. Track this deadline carefully.
Written Notice of Decision Required
When an insurer accepts or denies a claim, the notice must be in writing and include: the specific policy provisions relied upon, a clear explanation of the reasons, and information about the claimant's right to have the decision reviewed by the Department of Insurance.
Why this matters: Verbal denials and vague letters are not enough. The law requires a detailed written explanation. If the denial doesn't cite specific policy language or explain the reasoning, it doesn't meet the legal standard.
30-Day Written Extension Notice
If more time is needed than the 40-day decision period, the insurer must provide written notice every 30 calendar days specifying the reasons additional time is required and the additional information needed to make a decision. This notice must continue until the claim is accepted or denied.
Why this matters: Insurers cannot simply let a claim sit in limbo. If they need more time, they must tell you why in writing every 30 days. If you are not receiving these notices, the insurer is in violation — and the silence itself is evidence of unreasonable delay.
Statute of Limitations Notice
Except where a claim has been settled by payment, every insurer shall provide written notice of any statute of limitation or other time period requirement upon which the insurer may rely to deny a claim.
Why this matters: If the insurer intends to rely on a deadline to deny your claim, they must tell you about that deadline in advance. An insurer that silently lets a limitation period expire — without ever notifying you — has violated this regulation.
Unreasonably Low Settlement Offers
No insurer shall attempt to settle a claim by making a settlement offer that is unreasonably low. The Commissioner may consider factors including the evidence available, applicable legal authority, and the probable liability of the insured.
Why this matters: When the insurer offers you a fraction of what the claim is worth, that offer itself is a regulatory violation. This is separate from bad faith — even a single unreasonably low offer violates this regulation and can form the basis of a CDI complaint.
Consequential Damage and No Out-of-Pocket Costs
When a loss requires repair or replacement of an item or part, any consequential physical damage incurred in making the repair or replacement not otherwise excluded by the policy shall be included in the loss. The insured shall not have to pay for depreciation nor any other cost except for the applicable deductible.
Why this matters: If the contractor has to remove undamaged cabinets to access a water-damaged wall, the cost of removing and replacing those cabinets is part of the loss. The regulation's prohibition on 'any other cost' beyond the deductible has been argued to encompass overhead and profit as well, since those are necessary costs a policyholder would otherwise bear out of pocket.
Matching — Uniform Reasonable Appearance
When a loss requires replacement of items and the replaced items do not match in quality, color, or size, the insurer shall replace all items in the damaged area so as to conform to a reasonably uniform appearance.
Why this matters: If the insurer replaces one slope of your roof and the new shingles do not match the weathered existing shingles, the insurer must pay to replace the remaining slopes to achieve a uniform appearance. This applies to roofing, siding, flooring, cabinetry, and any other visible component where a partial replacement creates a noticeable mismatch.
Written Estimates and Contractor Name Requirement
If losses are settled on the basis of a written estimate, the insurer must supply the claimant with a copy. The estimate must restore property to no less than its pre-loss condition. If requested by the claimant, the insurer must promptly provide the name of at least one repair individual or entity that will make the repairs for the amount of the written estimate.
Why this matters: This is one of the most powerful regulations for policyholders. If the insurer says repairs cost $50,000 but every contractor you call says $90,000, you can demand they name a contractor who will actually do the work for their number. If they cannot produce one, their estimate is indefensible.
Depreciation Must Be Itemized and Justified
When the amount claimed is adjusted because of betterment, depreciation, or salvage, all justification for the adjustment shall be contained in the claim file. Any adjustments shall be discernible, measurable, itemized, and specified as to dollar amount.
Why this matters: Blanket depreciation — the same flat percentage applied across every line item — violates this regulation. The insurer must justify each depreciation figure individually. If they cannot explain why a specific item was depreciated by a specific amount, the depreciation is unsupported.
The Contractor Name Requirement — Your Most Effective Tool
Of all the regulations on this page, Section 2695.9(d) is arguably the most effective tool available to policyholders who are being underpaid on structural repairs.
Here is how it works: you do not need to obtain your own bids. Even without any competing estimates, you can send a written request demanding the insurer provide the name, address, and phone number of a licensed, reputable contractor who will actually perform the repairs for the amount of the insurer's estimate. The insurer's own number triggers the requirement.
In most cases, they cannot produce a contractor who will do the work for their number. And once they admit they cannot, their own estimate collapses. This shifts the burden of proof and is one of the fastest ways to force an insurer to increase their settlement.
Insurance companies frequently try to satisfy this requirement by pointing you to a contractor referral service or managed repair network. That does not meet the letter of the regulation. The rule requires the name of an actual licensed contractor who will perform the repairs for the insurer's estimated amount — not a referral service, not a list of vendors, not a program. If they give you anything other than a real contractor who will stand behind the price, that is not compliance.
Put the request in writing, cite the regulation by number, and keep the response (or lack of response) in your file. If they ignore the request, that is a separate regulatory violation under §2695.5(b).
Aliff v. California FAIR Plan (2025) — Smoke-Damage Limitations Struck Down
In Aliff v. California FAIR Plan Association(2025), the Los Angeles Superior Court invalidated FAIR Plan policy language that limited smoke-damage coverage to damage involving a “permanent physical change” visible to the unaided eye. The court held that the restrictive language was narrower than the coverage required by California Insurance Code § 2071, the Standard Fire Policy statute that sets the minimum coverage floor for fire insurance in this state.
Following Aliff, the FAIR Plan agreed to strike much of the offending language. While this is a trial court ruling without binding precedential effect, the legal reasoning could apply to any admitted California carrier that uses similar narrowing language on smoke claims, because § 2071 applies to all fire policies sold in California.
This is general information, not legal advice. Only a licensed California attorney can advise you on whether Aliff applies to your specific policy and claim.
Related Guides
Bad Faith Insurance Practices
When regulatory violations become actionable bad faith — your remedies, how to document violations, and when to involve an attorney.
Filing a CDI Complaint
How to file a complaint with the California Department of Insurance, what to include, and how to cite the specific regulations your insurer violated.
Fair Claims Settlement Practices Act
A detailed walkthrough of 10 CCR 2695 — every deadline, every required disclosure, and how to use the regulations to negotiate a fair settlement.
Think Your Insurer Is Violating These Rules?
If your insurance company is ignoring deadlines, lowballing your claim, or refusing to communicate, a licensed Public Adjuster can review your file, identify the violations, and fight for what your policy owes you.
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