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

When your insurance company misrepresents your policy, ignores your communications, refuses to investigate, or offers a settlement that bears no relationship to your actual loss, that conduct isn't just frustrating — it may violate California statutory law. Insurance Code Section 790.03 is the statute that defines unfair claims settlement practices in California, and a “790 letter” is the tool policyholders use to put their insurer on formal notice that specific violations are being documented.

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 constitute unfair claims settlement practices when committed by an insurer. Every policyholder should know what these are, because they describe — with remarkable precision — the exact tactics that insurance companies use every day to underpay and deny claims:

1. Misrepresenting pertinent facts or insurance policy provisions.This includes telling you something isn't covered when it is, misquoting policy language, or mischaracterizing the facts of your loss to justify a denial or reduced payment.
2. Failing to acknowledge and act reasonably promptly upon communications. When you call, email, or write to your insurance company about your claim, they are required to respond. Ignoring your communications or letting them sit unanswered for weeks is a violation.
3. Failing to adopt and implement reasonable standards for the prompt investigation of claims.The insurer must have actual procedures in place to investigate claims promptly. Assigning an adjuster who has 200 open files and can't get to yours for six weeks is a failure to implement reasonable investigation standards.
4. Refusing to pay claims without conducting a reasonable investigation. An insurer cannot deny your claim, or pay you less than what is owed, without first conducting a thorough and fair investigation of the loss. A desk denial based on satellite imagery when the adjuster never inspected the property is a textbook violation.
5. Not attempting in good faith to effectuate prompt, fair, and equitable settlements of claims in which liability has become reasonably clear. This is the big one. When the insurer knows the claim is valid and the amount is reasonably determinable, they must attempt to settle it promptly and fairly — not stall, lowball, or wear you down.
6. Compelling insureds to institute litigation to recover amounts due under an insurance policy by offering substantially less than the amounts ultimately recovered. If the insurer offers $30,000 on a claim that is ultimately resolved for $120,000, the insurer may have compelled you to litigate to recover what was owed all along.
7. Attempting to settle a claim on the basis of an application which was altered without notice to, or knowledge or consent of, the insured.
8. Attempting to settle claims for less than the amount to which a reasonable person would have believed he or she was entitled by reference to written or printed advertising material accompanying or made part of an application.
9. Attempting to settle claims on the basis of an application which was materially altered without notice to, or knowledge or consent of, the insured, his or her representative, or agent.
10. Making claims payments to insureds or beneficiaries not accompanied by a statement setting forth the coverage under which payments are being made. Every check should come with documentation explaining what it covers. A payment with no explanation of what it is for violates the statute.
11. Making known to insureds or claimants a practice of the insurer of appealing from arbitration awards in favor of insureds or claimants for the purpose of compelling them to accept settlements or compromises less than the amount awarded. In other words, using the threat of endless appeals to bully policyholders into taking less.
12. Delaying the investigation or payment of claims by requiring that a claimant submit a preliminary claim report, and then requiring submission of formal proof of loss forms, both of which contain substantially the same information. Asking for the same documentation repeatedly — or requiring you to fill out redundant forms — to slow down the process is a violation.
13. Failing to settle claims promptly, where liability has become apparent, under one portion of the insurance policy coverage in order to influence settlements under other portions of the insurance policy coverage.This is the “hold one part hostage” tactic. The insurer agrees that your dwelling damage is $80,000 but refuses to pay it until you agree to accept their $15,000 contents offer.
14. Directly advising a claimant not to obtain the services of an attorney. If your adjuster tells you “you don't need a lawyer” or “hiring an attorney will just slow things down,” that statement is itself a statutory violation.
15. Misleading a claimant as to the applicable statute of limitations.Telling you that you have more time than you actually do — or less time — to protect the insurer's position is a violation.
16. Not providing promptly a reasonable explanation of the basis relied on in the insurance policy, in relation to the facts or applicable law, for the denial of a claim or for the offer of a compromise settlement.If the insurer denies your claim or offers a reduced payment, they must tell you why in writing, with reference to the policy and the facts. A vague denial letter that says “not covered” without explanation violates the statute.

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.

How to Write an Effective 790 Letter

A 790 letter is only effective if it is specific, factual, and professional. A vague letter that simply says “you are violating the Insurance Code” without identifying the specific violations carries very little weight. Here is how to write one that gets results:

Be Specific About the Violations

Cite the exact subsection(s) of 790.03(h) that apply to the insurer's conduct. Do not simply say “you violated the Insurance Code” — say “your conduct violates Insurance Code Section 790.03(h)(5) in that you have failed to attempt in good faith to effectuate a prompt, fair, and equitable settlement of this claim despite liability being reasonably clear.”

Be Factual

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 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.

Be Professional, Not Emotional

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.

State What You Expect

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.

Preserve Your Proof of Delivery

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.

Consider 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).

Refusing to Pay Undisputed Portions — Subsection (13)

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 (12)

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 Investigation — Subsection (4)

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 violates subsection (4).

Misrepresenting Policy Provisions — Subsection (1)

The adjuster tells you that your policy doesn't 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 Written Denial With Reasons — Subsection (16)

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 the 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 is powerful evidence that the insurer breached the implied covenant of good faith and fair dealing.
• 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 isn't, 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.