New Time-Limited Settlement Demand Laws Need Testing In Court

California recently followed two other states by enacting a law that standardizes requirements a time-limited demand must meet to justify a bad faith refusal to settle an insurance claim. Sheppard Mullin's Jordan Derringer and Michael Bean say the courts will resolve how effective these statutes are in regulating policy limit demands.

Time-limited settlement demands are, in theory, effective tools to promote the quick and efficient resolution of disputed claims. But in practice, savvy plaintiffs' lawyers across the country have been exploiting these demands for decades to position insurance companies for extra-contractual damages.

Plaintiffs' lawyers argue that their tactics are necessary to help compensate claimants who were seriously injured by at-fault parties, and otherwise provide a check against insurers' delays in processing claims. These arguments, however, have begun to ring hollow in recent years in the face of ever-increasing abuses of time-limited