California-Specific RulesQuestion 66 of 474
An insurer unreasonably withholds an agreed, undisputed claim payment for several months. Beyond regulatory penalties, what statutory interest may attach to the wrongfully delayed sum under California law?
a.5% per year, paid only on amounts over $50,000
b.No interest unless the insured files a bad-faith lawsuit
c.Federal prime rate plus 2%, compounded monthly
d.10% per year on the liquidated sum from the date it became due
Explanation
California Civil Code §3287 entitles a person to prejudgment interest at the legal rate on any liquidated sum wrongfully withheld. The legal rate is 10 percent per year, computed simple interest from the date the sum became due. Bad-faith damages are separate; statutory interest under §3287 attaches automatically without a tort suit.
Law Reference: Cal. Civ. Code §3287This topic, taught in full in the Personal Lines Insurance Producer guide. Personal Lines Insurance Producer — Complete Study Guide (2026) — PDF + EPUB, $19.99 · 14-day refund →
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