LEGAL UPDATE FROM THE OFFICES OF STRAUS MYERS LLP.
Marvin is on the board of directors for San Diego Insurance Adjusters Association
Senate Bill 1155 went into effect on January 1, 2023. The Bill made changes to California Code of Civil Procedures Sections 999-999.5. The state has declared that it is “public policy of the state of California that prompt settlements of civil actions and claims are encouraged as beneficial to claimants, policy holders and insurers.” With this goal in mind the state enacted new laws regarding time-limited demands to settle claims. First, “the time period within which the demand must be accepted shall not be fewer than 30 days from date of transmission of the demand.” And “not fewer than 33 days, if transmission is by mail.” In addition, the demand must : be written, be labeled as a time-limited demand, include a clear and unequivocal offer to settle all claims within policy limits, including satisfaction of all liens, make an offer for a complete release from the claimant for the liability insurer’s insured from all present and future liability for the occurrence, provide the date of loss, location of loss, claim number, if known and provide a description of all known injuries sustained by the claimant and provide reasonable proof of the claim and damages, which may include, if applicable, medical records or bills that are sufficient to support the claim.
Section 999.3 also provides rules for recipients of a time limited demand. Accordingly, recipients of a time limited demand may accept the demand by providing written acceptance of the material terms outlined in Section 999.1. “Upon receipt of a time limited demand, attempts to seek clarification, additional information or request an extension to investigate, made during the time within which to accept the demand shall not, in and of itself be deemed a counteroffer or rejection of the demand.”
If the insurer does not accept the demand the insurer is required to notify the claimant before the expiration of the time limited demand. The notification must be in writing and explain the basis for the insurer’s decision.
Also of note is the laws background. The relevant sections were enacted with support from both Plaintiff and Defense sides. Moreover, the legislature has provided that this bill
would establish a new framework for all involved parties to settle claims using time limited demands. As the law has just gone into effect it is difficult to assess the long-term merits of the legislation. However, the effects of the aforementioned bill on actions based on bad faith and extracontractual damages could be significant.