Dispute or Denial of a Claim
Before an insurer is able to dispute or reject a claim presented by its insured, it is required to thoroughly investigate the claim to prove that the loss is one specifically excluded from coverage. The Supreme Court of California explained the obligation of the insurer, noting that while the task of “distinguishing fraudulent from legitimate claims may occasionally be difficult for insurers,” an insurer cannot in good faith deny liability under the policy “without thoroughly investigating the foundation for its denial.” Egan v. Mutual of Omaha, 24 Cal. 3d. 809, 157 Cal. Rptr. 482 (1979).
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