Insurance Code 790.03 and the 790 Letter: How to Put Your Insurer on Notice

When an insurance company misrepresents the policy, ignores communications, refuses to investigate, or offers a settlement that bears no relationship to the actual loss, that conduct may overlap with California’s statutory definition of unfair claims settlement practices. Insurance Code Section 790.03 sets out that definition. A “790 letter” — a formal written notice citing specific statutory subsections — is one tool that counsel use to put an insurer on notice that specific conduct is being documented against the statutory standards.

What Is Insurance Code 790.03?

California Insurance Code Section 790.03 is part of the Unfair Insurance Practices Act (UIPA). The statute defines specific acts that constitute unfair or deceptive practices in the business of insurance. Section 790.03(h) is the subsection that matters most to policyholders: it specifically identifies and prohibits unfair claims settlement practices.

This is not a theory or an argument — it is California statutory law that every insurer doing business in this state is required to follow. The California Department of Insurance (CDI) enforces these provisions, and violations can result in administrative penalties, license actions, and orders to change business practices.

Section 790.03 works in tandem with the Fair Claims Settlement Practices Regulations (10 CCR 2695), which implement and provide detailed procedural requirements for the standards set out in 790.03. Where 790.03 establishes the broad statutory prohibitions, the regulations provide specific timelines, documentation requirements, and claims handling procedures that insurers must follow. Together, these provisions define the minimum standard of conduct California expects from every insurance company.

The Prohibited Practices Under 790.03(h)

Section 790.03(h) lists sixteen specific practices that, when committed by an insurer, constitute unfair claims settlement practices — but only when the acts are committed “knowingly” or “with such frequency as to indicate a general business practice.” A single mishandled claim is generally not, by itself, a statutory UIPA violation; the threshold targets knowing conduct or patterns reflecting company-wide practice. Below is the verbatim list of the sixteen prohibited practices from the current statute:

Plain English: What the Most Commonly Cited Subsections Mean in Practice

In property insurance claims, the subsections most frequently cited by plaintiff attorneys are (1), (2), (3), (5), (6), (11), (12), and (13). Plain-language explanations of each (and how they intersect with the duty-to-investigate cases like Egan):

• Subsection (1) — Misrepresenting policy provisions. Many plaintiff attorneys argue this covers an adjuster telling an insured something is not covered when it is, misquoting policy language, or mischaracterizing the facts of the loss to justify a denial or reduced payment.
• Subsection (2) — Failing to acknowledge or respond promptly. Read alongside 10 CCR §§ 2695.5(b) and 2695.5(e), which set specific response and acknowledgment deadlines, this subsection often supports a record of unreasonable delay.
• Subsection (3) — Failing to adopt and implement reasonable investigation standards. This is the subsection that connects most directly to the duty-to-investigate framework established in Egan v. Mutual of Omaha (1979) 24 Cal.3d 809. An insurer that denies a claim without a thorough investigation may run afoul of this subsection (and of the common-law duty).
• Subsection (5) — Failing to attempt good-faith settlement when liability is reasonably clear.The big one for property claims. Note that the statutory threshold is “liability has become reasonably clear” — a valuation dispute is not, by itself, a (5) violation.
• Subsection (6) — Compelling litigation by offering substantially less than ultimately recovered.The statutory trigger is amounts “ultimately recovered in actions” with claim and recovery amounts “reasonably similar.” A settlement, appraisal, or supplement that increased the payout does not automatically satisfy the trigger.
• Subsection (11) — Duplicative documentation requests. Cycling an insured through preliminary claim reports and then formal proof-of-loss forms requesting the same information.
• Subsection (12) — Holding one coverage portion hostage to influence settlement of another.The classic “we’ll pay the agreed dwelling figure when you accept our contents offer” tactic.
• Subsection (13) — Failing to provide a reasonable written explanation for denial.The denial letter must reference the policy and the facts — a form letter saying “not covered” without explanation generally falls short.

Adjuster Jargon: What “790 Letter” Usually Means — and How This Article Uses It

Before going further, a terminology clarification, because the phrase “790 letter” is California adjuster jargon and gets used in more than one way:

• The standard adjuster usage.In California claims-handling practice, a “790 letter” is the initial acknowledgment letter the insurance adjuster sends to the insured at the start of a claim — telling the insured what coverages apply and what their rights are. The carrier sends it because § 790.03 and the Fair Claims Settlement Practices Regulations (10 CCR §§ 2695.4 and 2695.5) require the insurer to acknowledge the claim and disclose applicable coverages. That acknowledgment letter is what most adjusters mean when they say “the 790 letter went out.”
• What a denial letter is — and is not.A denial letter written to conform with the § 790.03 statute (specifically the reasoned-denial requirement at § 790.03(h)(13) and 10 CCR § 2695.7(b)(1)) is a separate, later document. Adjusters do notgenerally refer to a denial letter as a “790 letter,” even though it has to comply with the same statute.
• How this article uses the term.In plaintiff-side bad-faith practice, the phrase “790 letter” is sometimes used differently — to describe a notice letter the insured or their counsel sends to the carrier, citing specific subsections of § 790.03(h) and documenting conduct that may violate the statute. That is the usage the rest of this article describes. It is a real practice tool, but it is plaintiff-bar shorthand, not the adjuster-side meaning. Where this article says “790 letter” below, we mean the insured-side notice letter, not the carrier’s initial acknowledgment.

The two usages of the same term do create confusion. If you are searching for information about the acknowledgment letter you received from the carrier at the start of your claim, the right reference points are the Fair Claims Settlement Practices Regulations at 10 CCR §§ 2695.4 (affirmative disclosure of coverages) and 2695.5(b) (acknowledgment timelines). The rest of this article is about the second usage — the insured-side notice letter citing § 790.03(h) violations.

What Is a “790 Letter”?

A 790 letter is a formal written communication to the insurance company that cites specific violations of Insurance Code Section 790.03(h). It is not a lawsuit. It is not a threat. It is a notice letter that documents the insurer's conduct and puts them on formal notice that their handling of your claim is being tracked against the specific statutory standards they are required to follow.

The 790 letter creates a written record of the policyholder's objections and identifies the specific statutory provisions the insurer has violated. It connects the insurer's specific conduct — the missed communications, the lowball estimate, the failure to investigate, the denial without explanation — to the exact subsection of 790.03(h) that prohibits that conduct.

Perhaps most importantly, the 790 letter puts the insurer on notice that their conduct is being documented and may constitute bad faith. The adjuster who receives this letter knows that it will be read by their supervisor, the claims manager, and potentially the legal department. It changes the dynamic of the claim because it signals that the policyholder understands the law and is building a record.

Why the 790 Letter Matters

The 790 letter matters for several reasons, each of which strengthens the policyholder's position:

• It creates a contemporaneous written record.The letter documents the insurer's violations in real time — not months later when memories fade and details are disputed. This contemporaneous record is far more powerful than a policyholder's recollection at deposition.
• It demonstrates awareness of rights.An insurer treats a policyholder who cites specific subsections of 790.03(h) very differently from one who simply says “I disagree with your estimate.” The 790 letter signals that the policyholder knows what the law requires and is tracking the insurer's compliance.
• It establishes the foundation for a bad faith claim. Under Egan v. Mutual of Omaha (1979) and Jordan v. Allstate(2007), the insurer's response — or failure to respond — to a 790 letter is relevant to whether the insurer acted in bad faith. An insurer that receives a detailed 790 letter identifying specific violations and continues the same conduct has a much harder time claiming its behavior was reasonable.
• It escalates the claim internally. A 790 letter typically gets escalated to a supervisor, claims manager, or in-house counsel — people who have more authority to resolve the dispute than the adjuster who has been handling the file. The frontline adjuster may be following a script; the supervisor reading the 790 letter is evaluating exposure.
• Insurance companies track 790 letters.They take them seriously because they signal potential litigation, potential CDI complaints, and potential bad faith exposure. The insurer's internal systems flag these letters, and the claim file gets elevated attention.

What a Well-Drafted 790 Letter Typically Contains

Effective 790 letters tend to share several characteristics. The summary below describes what counsel typically include — not a template a non-lawyer should attempt to draft from scratch.

Specificity About the Violations

A 790 letter drafted by counsel typically cites the exact subsection(s) of 790.03(h) and connects the specific facts to the statutory language. For example, counsel might write: “Your conduct appears to violate Insurance Code Section 790.03(h)(5) in that, despite liability having become reasonably clear, you have failed to attempt in good faith to effectuate a prompt, fair, and equitable settlement of this claim.” The point of the specificity is to create a record that ties the insurer’s conduct to the exact statutory prohibition.

Factual Detail

Describe what the insurer did or failed to do, with dates. “On March 15, I submitted a supplement request with three contractor estimates documenting $47,000 in additional damage. As of April 28, forty-four days later, I have received no response to that submission. This constitutes a violation of Insurance Code Section 790.03(h)(2).”

Reference to Specific Documents

Point to the estimate, the denial letter, the adjuster's email, the inspection report, the contractor's scope — whatever documents support your position. The more specific your references, the harder it is for the insurer to dismiss your letter.

Professional Tone

This is not the place for anger or frustration. The 790 letter should read like a document that could be presented to a judge — because it may be. Be precise, be factual, and let the statute do the work. The statutory language itself is powerful enough; you do not need to add editorial commentary.

Clear Statement of Remedy Sought

Tell the insurer specifically what you want them to do: pay the claim, issue the supplement, correct the estimate, provide the documentation they are withholding, respond to your communications, or explain their position in writing with reference to the policy. Give them a reasonable deadline to respond.

Proof of Delivery Preservation

Keep a copy and send the letter by certified mail with return receipt requested, or by email with delivery/read confirmation. If you send it by email, consider also sending a hard copy by certified mail. The delivery confirmation becomes part of the record.

Distribution to Multiple Recipients

Sending the letter to the adjuster alone may not be sufficient. Consider also sending it to the adjuster's supervisor, the claims department manager, or the insurer's home office. The wider the distribution within the insurer's organization, the harder it is for anyone to claim they were unaware of the issues.

Common 790.03(h) Violations in Property Claims

Here are the most common violations seen in real-world property insurance claims, with examples of how they play out:

Lowball Estimates That Ignore Documented Damage — Subsection (5)

The insurer's adjuster writes a scope for $35,000. Your contractor's estimate is $95,000. The insurer ignores your contractor's documentation, refuses to discuss the discrepancy, and issues payment based solely on their own estimate. When liability is reasonably clear and the insurer refuses to attempt a fair settlement, that is a violation of subsection (5).

Holding One Coverage Portion Hostage — Subsection (12)

Your dwelling claim has $80,000 in damage that both sides agree to, plus $40,000 in disputed items. The insurer refuses to pay the $80,000 until you agree to accept their position on the disputed $40,000. This is one of the most aggressive — and most common — tactics in claims handling. The statute explicitly prohibits it.

Requiring Duplicative Documentation — Subsection (11)

You submit a contents inventory. The insurer acknowledges receipt. Three weeks later, a new adjuster is assigned and asks you to resubmit the same inventory on a different form. Then a third request comes for “additional documentation” that you already provided. This cycle of redundant requests is designed to exhaust you, and it violates the statute.

Denying Claims Without Adequate Investigation — Subsection (3) (and duty-to-investigate case law)

The insurer denies your claim based on a desk review, satellite imagery, or a phone call — without ever sending an adjuster to inspect the property. Or they send an adjuster who spends 20 minutes at a property with $200,000 in damage. The duty to investigate is not optional, and a denial based on an inadequate investigation may violate subsection (3) and the duty-to-investigate framework in Egan and progeny.

Misrepresenting Policy Provisions — Subsection (1)

The adjuster tells you that your policy does not cover “cosmetic damage” when the policy contains no such exclusion. Or they claim your deductible is higher than it actually is. Or they tell you that overhead and profit is “not owed” when it clearly is. Any misrepresentation of what your policy says or means is a violation of subsection (1).

Failing to Respond to Communications — Subsection (2)

You send three emails over six weeks. None are answered. You leave voicemails. No callback. You send a certified letter. Nothing. The statute requires the insurer to acknowledge and act reasonably promptly upon communications — not ignore them until the policyholder gives up.

Not Providing a Reasonable Written Explanation for Denial — Subsection (13)

The insurer denies your claim or offers a reduced amount but provides no written explanation of why. Or the denial letter is so vague that it does not actually explain the basis for the denial. The statute requires a reasonable explanation with reference to the policy and the facts — not a form letter that says “coverage has been denied.”

The Relationship Between 790.03 and Bad Faith

This is one of the most important — and most misunderstood — areas of California insurance law. Understanding the relationship between 790.03 and bad faith is essential for any policyholder dealing with an insurer that is not handling their claim fairly.

The practical effect of Moradi-Shalal is not that 790.03 is meaningless — far from it. The statute remains critically important because:

• The conduct prohibited by 790.03(h) is often the same conduct that constitutes bad faith under Egan v. Mutual of Omaha (1979) and Gruenberg v. Aetna Insurance Co. (1973). When an insurer violates 790.03(h), that violation may serve as powerful evidence that the insurer breached the implied covenant of good faith and fair dealing — though a statutory or regulatory violation alone does not automatically equate to bad faith, and bad faith can exist even without a statutory or regulatory violation. See our bad faith guide for a full discussion of this nuance.
• In litigation, plaintiff counsel sometimes demonstrate that an insurance company had a pattern and practice of mistreating numerous homeowners similarly. Colonial Life & Accident Insurance Co. v. Superior Court(1982) 31 Cal.3d 785 is often cited for the proposition that pattern-and-practice discovery can be available to show that the insurer’s conduct toward an individual policyholder was not an isolated incident but part of a company-wide pattern. The scope and availability of such discovery is fact-specific and a question for counsel.
• The 790 letter documents violations of the exact same standards that courts use to evaluate whether an insurer acted in bad faith. A claim file that contains a 790 letter identifying specific statutory violations — followed by continued bad conduct — tells a compelling story to a judge or jury.
• The Fair Claims Settlement Practices Regulations (10 CCR 2695), which implement 790.03, are independently enforceable through CDI complaints. Even though you cannot sue directly under 790.03, the regulatory violations that flow from the same conduct can be reported to the Department of Insurance.

When to Send a 790 Letter

Not every disagreement with your insurer warrants a 790 letter. But when the insurer's conduct crosses the line from a legitimate dispute into conduct that the statute specifically prohibits, a 790 letter is appropriate — and often necessary. Consider sending one in these situations:

• The insurer has ignored your communications for an unreasonable period — emails go unanswered, voicemails are not returned, supplement requests sit for weeks with no response.
• The estimate is clearly deficientand the insurer refuses to correct it — documented damage is omitted, materials are downgraded, labor rates are below market, and the insurer will not engage with your contractor's estimate.
• The insurer denies coverage without adequate investigation — the denial is based on a cursory review, a desk adjustment, or an expert report that contradicts the physical evidence.
• The insurer demands an EUO or SIU investigation without apparent justification — there is no indication of fraud, but the insurer is using the investigation as a delay tactic or intimidation tool. See our guide on recorded statements and SIU investigations.
• The insurer misrepresents what the policy covers — the adjuster tells you something is excluded when it is not, or misquotes the policy language to justify their position.
• Before demanding appraisal— to establish the record of the insurer's conduct before invoking the appraisal process.
• Before retaining an attorney — to establish the record so that if litigation becomes necessary, the attorney has a documented foundation to work with.