California Insurance Code & EthicsQuestion 43 of 158
An insurer unreasonably delays paying an undisputed amount on a homeowners claim by several months. Under Civil Code §3287, the insured may be entitled to:
a.Treble damages plus attorney fees
b.5% statutory interest from the date of loss
c.Only the amount of the undisputed loss
d.10% statutory interest on the delayed amount
Explanation
Civil Code §3287 entitles a claimant to prejudgment interest at the legal rate (10% per annum on noncontract obligations) once the amount due is fixed and certain. For an undisputed claim amount, interest accrues from the date the obligation became liquidated. This is in addition to any bad-faith remedies.
Law Reference: Cal. Civ. Code §3287Practice all 158 questions free — no signup required.
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