In California, do insurance companies have to follow the Fair Claims Settlement Practices under sections 2695.1 – 2659.14 even for additional insured who are also the claimants? My wife and I hired a contractor to build us a new home and he destroyed it by hiring unlicensed/unqualified subcontractors. We put in a claim 100 days ago, on 11/29/22, with his insurance company. On 12/16/22, they sent out a construction expert to document all the defects and create a cost estimate for the repairs. The report was to be completed by 2/1/23. That date has come and gone. They’ve refused to turn over any documents, have only given me 1 legitimate status update, and have not taken any of my phone calls since 1/19/23. Now, they’ve hired an attorney to represent them.
I am sorry to hear about your situation. It’s unclear what kind of policy you are an additional insured under, and how that plays in here. Since you own the property, you should be the primary named insured if this was a first party property insurance policy that paid to fix damage to property. If that were the case, the insurance company would owe a duty of good faith and be governed by the applicable parts of the Fair Claims Act. However, it sounds like you are an additional insured under the contractor’s liability policy. This is different from a first party property policy. Liability policies, also called third-party policies, cover the insured against claims made by third-parties due to negligence. In other words, if someone gets hurt while walking through the jobsite because it is unsecured, or if the contractor causes damage to a neighbor’s house, the liability policy would cover any insured against a lawsuit by the injured party, and that would include you as an additional insured. For this reason, it is common to add the property owner on the contractor’s third-party liability insurance policy. But as an additional insured, the insurance policy may not give you all the same benefits as the primary insured, and likely does not. It depends on the contract terms, but it is highly unlikely that you are considered an insured for purposes of your liability claim against the contractor. If that is the case, then there is no duty of good faith between you and the carrier. The analysis may change depending on the policy terms, but this is the most likely scenario.