California-Specific RulesQuestion 66 of 158
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.No interest unless the insured files a bad-faith lawsuit
b.5% per year, paid only on amounts over $50,000
c.10% per year on the liquidated sum from the date it became due
d.Federal prime rate plus 2%, compounded monthly
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 §3287Practice all 158 questions free — no signup required.
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