Anyone who experiences a mishap and makes a claim for an insurance settlement wants to resolve the matter quickly. The insurance company wants to do sufficient research to determine the extent of the damages so that it only pays out only what it has to.
The interests of the claimant and the insurer may not meet, leading some claimants to use time-limited demands for settlements.
Why claimants send time-limited demands
A claimant may suspect an insurer is taking excessive time or making an unreasonable offer. The individual may make an offer for a settlement of the maximum policy limits with the stipulation of accepting the deal within a specific time.
If an insurer does not accept this demand, the case usually goes to trial, where a court could award more than the settlement amount. Some claimants may use this technique as an initial strategy for getting more than the policy limits from an insurance payout.
New restrictions on time-limited demands
The California legislature sought to limit what it perceived can be an unfair strategy against insurance companies. SB 1155 sets requirements for time-limited demands to ensure such requests are reasonable.
The law sets the following conditions for demands:
- The demand must be in writing with a clear designation of its purpose.
- The request must specify an amount within the policy limits.
- The demand must allow at least 33 days from a regular postal mailing date or 30 days for certified mail, email and fax transmissions.
- The offer must offer a complete release from liability.
- The demand must contain reasonable proof to support the claim.
The new rules only apply to demands a claimant makes before taking the issue to court or demanding arbitration. How claimants and insurers navigate the requirements can significantly affect awards and settlements.