Time is an illusion.Albert Einstein
New year, new law!
Effective this year is CCP § 999 et seq, which governs time-limited demands in property damage, personal injury, and wrongful death claims. Let’s breakdown the statutory scheme and conclude with what it means in practice.
What Does CCP § 999 Say?
“It is declared to be the public policy of the State of California that prompt settlements of civil actions and claims are encouraged as beneficial to claimants, policyholders, and insurers.” CCP § 999(a).
What this great language shows is the purpose of the statutory scheme: public policy supports prompt settlements, which benefits all parties involved.
Subsection (b) defines (1) extracontractual damages; and (2) time-limited demands.
What Does CCP § 999.1 Say?
Listed here are the requirements a time-limited demand must meet under the statutory scheme: it must be (1) written; (2) labeled as a time-limited demand; and (3) have “material” terms.
Those “material” terms include:
(a) a time period in which the demand must be accepted, and the period cannot be less than 30 days (33 days, if the demand is mailed);
(b) a “clear and unequivocal” offer to settle “all claims within policy limits, including the satisfaction of all liens”;
(c) an offer for a complete release from the claimant for the insured’s liability;
(d) the date and location of the loss;
(e) the claim number (if known);
(f) a description of the claimant’s injuries; and
(g) “reasonable proof” to support the claim, which could include medical records or bills.
What Does CCP § 999.2 Say?
This section shows where the time-limited demand should be sent: either to the email address or physical address of the liability insurer or to the insurance adjuster assigned to handle the claim. As for the former, the California Department of Insurance “shall” post online the proper email address or physical address designated by the liability insurers.
What Does CCP § 999.3 Say?
Listed here are rules and amplifications.
Recipients of a time-limited demand may accept the demand by providing written acceptance of the “material” terms. CCP § 999.3(a).
Attempts to seek clarifications or more information or time are not rejections or counteroffers of the demand, as long as they are made within the requisite (30 days) period. CCP § 999.3(b).
A liability insurer “shall” tell a claimant, in writing, of its decision and of the basis for that decision. The decision must be sent before the requisite period. It “shall be relevant” in any later bad faith lawsuit. CCP § 999.3(c).
What Does CCP § 999.4 Say?
This section explains the consequences of failing to issue a time-limited demand which does not “substantially” follow this statutory scheme (CCP §§ 999.1, 999.2).
That time-limited demand “shall not be considered” to be a reasonable offer in a later bad faith claim.
This section, however, is inapplicable to pro se claimants.
What Does CCP § 999.5 Say?
The statutory scheme closes by discussing its applicability.
It only applies to causes of actions and claims cover under auto, homeowners, or commercial liability policies for property damage, personal injury, or wrongful death. CCP § 999.5(a).
Besides the statutory scheme, “nothing” alters existing law. CCP § 999.5(b). It applies to time-limited demands issued on or after January 1, 2023. CCP § 999.5(c).
What Does CCP § 999 Et Seq Mean In Practice?
What does it mean in practice? Here is one major conclusion.
The major conclusion is that arguably the statutory scheme protects against bad faith claims based on an insurer’s refusal to accept a “reasonable settlement demand” within policy limits (see CACI 2334). If a claimant represented by counsel sends a time-limited demand but the demand fails to “substantially” follow the statutory scheme, then the demand cannot be considered a “reasonable settlement demand.” See CCP § 999.4 Apparently then, there is no bad faith.
How to avoid that scenario? Follow CCP §§ 999.1, 999.2.
Questions? Contact Me for a free consultation!