When the Insurance Company Denies Liability: Next Steps for California Personal Injury Victims

You’ve been injured in a car crash, a slip-and-fall, or another serious accident in California. You’ve done everything right—filed a claim, provided medical records, and cooperated with the insurance adjuster—only to receive a letter stating that the insurer denies liability. It’s a frustrating and frightening moment, but it does not mean the end of your case. You can work with the right attorney to help you when the insurance company denies liability.

Below, we explain why insurers deny claims, the unique rules in California that affect your rights, and the practical steps to take if you receive a denial.

Why Insurance Companies Deny Liability

Insurance carriers have one primary goal: protecting their bottom line. Even when an accident seems straightforward, adjusters are trained to look for reasons to limit or deny payment. Common justifications include:

1. Disputing Fault
   The insurer may argue their policyholder wasn’t responsible for the accident or that you caused it.
   Example: A rear-end crash where the insurer claims you stopped “suddenly” and contributed to the collision.

2. Insufficient Evidence
   They may assert there isn’t enough proof of negligence or that medical documentation doesn’t clearly connect your injuries to the accident.

3. Policy Exclusions or Lapses
   An insurer might claim the driver’s policy had lapsed, the coverage doesn’t apply to this type of accident, or an exclusion bars payment.

4. Comparative Negligence
   California follows a pure comparative negligence rule (Cal. Civ. Code §1714), which allows insurers to reduce compensation by the percentage of fault assigned to the victim. A denial letter may be a negotiation tactic to push for a low settlement. California is identified as one of the states with the highest auto insurance claim denial rates in a recent survey/study.

5. Pre-Existing Conditions
   Adjusters often argue that your injuries stem from a prior condition rather than the accident.

Your Rights Under California Law When the Insurance Company Denies Liability

Even if the insurer says “no,” you have powerful protections:

• Duty of Good Faith and Fair Dealing – Under California law, insurance companies must handle claims fairly. An unreasonable denial can lead to a bad faith lawsuit seeking not only damages but also attorney’s fees and, in some cases, punitive damages.

• Two-Year Statute of Limitations – For most personal injury cases (Cal. Civ. Proc. Code §335.1), you have two years from the date of injury to file a lawsuit. If a government entity is involved (for example, a city-owned vehicle), you must typically file an administrative claim within six months.

• Right to Independent Action – You are never required to accept an insurer’s decision. You may sue the at-fault party directly or pursue arbitration depending on the policy.

Critical Steps to Take After a Denial

1. Review the Denial Letter Carefully

The insurer is required to state the reason for denial. Look for:

• Policy provisions or exclusions cited

• Alleged factual disputes (e.g., fault, medical causation)

• Deadlines for appeal or further action

Save this letter—it becomes evidence in any future negotiations or lawsuits.

2. Gather and Preserve Evidence

Strong evidence is the key to overcoming a denial. This can include:

• Accident Reports – Police or CHP reports noting road conditions and witness statements.

• Medical Records – Diagnoses, treatment plans, and doctor’s notes linking injuries to the incident.

• Photos and Video – Scene photographs, dashcam footage, or surveillance video.

• Witness Statements – Contact information for anyone who saw the accident.

If a government agency may be involved, such as Caltrans for a dangerous roadway, your attorney can send preservation letters to ensure records and maintenance logs aren’t destroyed.

3. Avoid Direct Negotiation Without Counsel

Adjusters may appear helpful, but anything you say can be used against you. A California personal injury attorney can communicate on your behalf, protect you from leading questions, and keep you from inadvertently admitting partial fault.

4. Consider an Internal Appeal

Some policies allow you to appeal within the insurance company before filing a lawsuit. Your lawyer can submit additional evidence, expert reports, or legal arguments to challenge the denial.

5. File a Personal Injury Lawsuit

If the insurer refuses to reconsider, the next step is litigation. Filing a lawsuit allows:

• Discovery – Your attorney can obtain driver logs, maintenance records, or internal insurance communications.

• Expert Testimony – Accident reconstructionists and medical experts can establish liability and damages.

• Leverage for Settlement – Many insurers become more reasonable once a lawsuit is underway.

6. Explore a Bad Faith Claim

If the insurer’s denial was unreasonable—for example, ignoring clear evidence or misrepresenting policy terms—California law permits a bad faith insurance claim. Successful plaintiffs may recover not only the original damages but also attorney’s fees and punitive damages designed to punish wrongful conduct.

Special Considerations in California

Government Claims

If your accident involved a public entity (for example, a poorly maintained state highway or a city-owned vehicle), you must file a Government Tort Claim within six months of the accident (Gov. Code §§ 810–996.6). Failing to meet this deadline can bar recovery—even if the insurer denied your claim.

Uninsured/Underinsured Motorists

California requires insurers to offer UM/UIM coverage. If the at-fault driver lacks adequate insurance and your own carrier denies the claim, you can pursue arbitration under your policy and, if necessary, a bad faith action.

Comparative Negligence

Even if you share some fault, you can still recover damages reduced by your percentage of responsibility. For example, if you are found 20% at fault and your damages are $100,000, you may still recover $80,000.

Why Legal Representation Matters

Facing a denied claim without a lawyer places you at a significant disadvantage.
B|B Law Group’s personal injury team can:

• Investigate Thoroughly – Identify all potential defendants, including employers, product manufacturers, or government agencies.

• Calculate Full Damages – Including future medical costs, lost earning capacity, and pain and suffering.

• Negotiate Aggressively – Use evidence and legal pressure to push insurers toward fair settlements.

• Litigate When Necessary – Take your case to court if negotiations fail.

Insurance companies track which lawyers are willing to go to trial. Having experienced trial counsel often leads to faster, higher settlements.

Take Action Quickly

A denial letter is not the end of your personal injury claim—it’s the beginning of the next phase. By acting promptly, preserving evidence, and working with a skilled California personal injury attorney, you can protect your rights and pursue the compensation you deserve.

B|B Law Group offers free consultations to review denial letters, evaluate evidence, and outline your legal options.
If you’ve received a denial of liability from an insurance company, contact B|B Law Group today to take the next step toward justice.