What You Need to Know
- California insurers must decide claims within 40 days— a strict timeline that policyholders can leverage to avoid delays.
- A 2024 federal court ruling in Yacullo v. AIG underscores the consequences for insurers who violate this rule, exposing them to bad faith claims.
- Other states have their own deadlines— understanding these timelines is crucial when dealing with an insurance claim.
By Samuel A. Lopez – USA Herald
[LOS ANGELES, CA] – Insurance companies are notorious for dragging their feet when handling claims. Delays leave policyholders frustrated, financially strained, and unsure of their legal standing. But in California, insurers must make a decision — accept or deny a claim — within 40 days of receiving proof of loss. If they need more time, they are legally required to provide a written request for an extension, and agree to give updates every 30 days. Failure to comply can expose them to bad faith litigation.
This deadline, established under California Code of Regulations, Title 10, § 2695.7(b), is a powerful tool for policyholders. But how often do insurers follow it? And what happens when they don’t?
A case out of California’s federal courts last year made it clear: violating the 40-day rule and fair claims settlement practices regulations can have serious consequences.
