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 legal advice specific to your situation, consult a licensed attorney. For professional claims assistance, contact us for a free consultation.
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 original lowball offer was itself a violation. This provision protects you from being pressured into accepting unfair settlements.
Failing to Provide a Reasonable Explanation for Denial
When an insurer denies a claim or offers a compromise settlement, they must provide a reasonable explanation of the basis for the denial or offer in relation to the policy provisions.
Why this matters: A denial letter that just says 'claim denied' with no explanation is illegal. The insurer must tell you exactly why they denied your claim and cite the specific policy language they are relying on.
Attempting to Settle for Less Than a Reasonable Person Would Expect
Insurers cannot attempt to settle a claim by making a settlement offer for an amount that a reasonable person reading the relevant advertising material would not expect.
Why this matters: Your insurer's marketing promises matter. If they advertised comprehensive protection and then try to settle for a fraction of your loss, 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.
Making Known Claims Practices That Lead to Appeals
Insurers cannot use claims-handling practices that lead to consistently requiring policyholders to resort to appeals, appraisals, or litigation to receive fair settlements.
Why this matters: If a carrier routinely lowballs every claim knowing most people won't fight back, that pattern itself is a violation — even if individual settlements are eventually corrected.
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 checks 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."
Good Faith and Fair Dealing
Every insurer must act in good faith and deal fairly with policyholders. This is the overarching standard that governs every claims-handling interaction. The insurer must not place its own financial interest above its duty to the policyholder.
Why this matters: This is the umbrella regulation. Every unreasonable delay, every ignored document request, every lowball offer can be measured against this standard. It is the regulation that gives teeth to all the others.
15-Day Acknowledgment Deadline
Every insurer must acknowledge receipt of every communication regarding a claim within 15 calendar days. The acknowledgment must include the name of the person handling the claim and how to contact them.
Why this matters: If you send a letter, email, or leave a voicemail about your 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
Insurers must respond to all communications from a claimant which reasonably suggest a response is expected. The response must be made within 15 calendar days.
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
Insurers must conduct a thorough, fair, and objective investigation sufficient to determine liability and the extent of the loss. The investigation must be completed promptly and cannot be unreasonably delayed.
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.
Status Report When Multiple Adjusters Assigned
If three or more adjusters are assigned to a claim within a six-month period, the insurer must provide the claimant with a written status report within 10 business days of the most recent assignment. The report must summarize the current status and outline the next steps.
Why this matters: Shuffling your claim between adjusters is a classic delay tactic. Each new adjuster has to 'get up to speed,' which resets the clock in practice. This regulation forces transparency when it happens.
Right to Claim-Related Documents
Upon request, the insurer must provide copies of all documents that relate to the evaluation of the claim, including adjuster reports, estimates, photographs, and correspondence — within 15 calendar days.
Why this matters: You have the right to see everything in your claim file. The adjuster's notes, their estimate, their photos, internal emails about your claim — if you ask for it, they must provide it within 15 days. This is one of the most underused tools available to policyholders.
Contractor Name Requirement for Repair Estimates
If an insurer's claim payment or estimate is based on the cost of repairs, and the claimant requests it, the insurer must provide the name, address, and telephone number of a contractor who will perform the repairs for the amount stated in the estimate.
Why this matters: This is one of the most powerful regulations for policyholders. If your insurer says the 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.
Standards for Prompt, Fair Settlement
For first-party property claims, insurers must provide a fair settlement that accounts for all covered damage. They cannot require the claimant to make a claim under another policy first, and they must include overhead and profit in repair estimates when a general contractor is reasonably likely to be involved.
Why this matters: This regulation prevents insurers from playing games with your settlement amount. It requires overhead and profit (O&P) when a GC is needed, prohibits forcing you to use your own insurance first before subrogation, and ensures the settlement actually covers the repairs.
The Contractor Name Requirement — Your Most Effective Tool
Of all the regulations on this page, Section 2695.7(g) is arguably the most effective tool available to policyholders who are being underpaid on structural repairs.
Here is how it works: if your insurer writes an estimate for $60,000 and you get bids from three licensed contractors for $95,000 or more, 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 $60,000.
In most cases, they cannot. And once they admit they cannot find a contractor to do the work for their number, 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.
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(e).
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.
Read guide →
📁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.
Read guide →
⚖️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.
Read guide →
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.
Request a Free Claim Review →