The Implications of California’s Time-Limited Demand Statute

The new year has brought some recent changes to existing California personal injury law statutes, mainly related to what is known as “time-limited demands.”

Within the framework of personal injury law, such demands may be referred to as “time-limited settlement offers,” “policy limit demands,” “time limit demands,” or “998 offers to compromise,” all of which have long been regulated by California’s Code of Civil Procedures (Section 998). They typically seek a settlement amount equal to an insurance policy’s limits.

California’s Code of Civil Procedure Section 999, which went into effect on January 1, 2023, now governs “time-limit, policy-limit” demands made prior to filing lawsuits or demands for arbitration, which is good news for accident victims.

With this new law, California joins an increasing number of other states that are passing laws that govern demands from accident victims that the at-fault party’s insurer pays within a specific timeframe, the policy limits to settle a claim. The new rule applies to any demands that are made after the effective date of the law (January 1, 2023) and to claims that are covered under auto, vehicle, homeowner, and commercial liability policies that cover property damage, bodily or personal injury, or claims of wrongful death.

California’s new time-limited demand statute outlines the following:

Items to be Included in Time-Limited Demands

According to California’s new time-limited demand statutes, time-limited demands must be submitted in writing and labeled such, reference the new code section, and includes material terms, including the following:

• The time-limited, policy-limit demand must be accepted within 30 days of the transmission date if by email, certified mail, or fax and within 33 days when transmitted via mail.
• An unequivocal settlement offer for any claim within the policy’s limits, including lien satisfaction where applicable.
• A release offer from the individual filing the claim barring them from seeking any present or future liability associated with the occurrence.
• The correct location and date of the associated loss.
• If known, the correct claim number.
• A complete description of any known injuries that the claimant has sustained.
• Reasonable proof, including, where applicable, medical bills or records supporting the claim.

The Location Where the Demand Must be Sent

According to the new statute, any demand should be sent as follows:

• To the email or the physical address that the insurer designates for time-limited demands. Under the law, the insurer must provide the address to the California Department of Insurance, which will post the information on the California Department of Insurance website, or;
• To the insurance carrier’s representative, if known, that has been assigned to handling the specific claim.

The Insurance Company’s Response

California’s new time-limited demand statute also outlines how insurance companies are to respond to time-limited demands. The insurer can accept the time-limited demand by providing a written acceptance.

This new statute also notes that any attempts for additional information, clarification, or extension requests, whether for additional information or to conduct further investigation, are not to be considered a rejection of a counteroffer of the initial demand.

The law states that if the insurer fails to accept time-limited demands, the insurer must notify the person making the claim of their decision and the reason for that decision.

That notification must be sent before the time-limited demand expires, including any extensions agreed upon by all involved parties. It will also be relevant to any lawsuits that allege extra-contractual damages.

Implications of Noncompliance

The law states that if the time-limited demand doesn’t “substantially comply,” it won’t be considered a reasonable settlement offer within the limits of the insurance policy.

This new law offers a better framework for insurance companies, the insured, and those filing a claim to submit and respond to any time-limited policy-limit demands properly. In addition, the law aims to reduce what is known as bad faith “setups” on behalf of insurers.

Why You Need a Personal Injury Lawyer to Help You File a Time-Limited Policy-Limit Demand

It is important to note that this law only applies to claimants represented by an attorney.

To ensure that you are adequately compensated and that your rights are protected when filing a time-limited demand, you must hire a personal injury attorney to help you with your claim.

If you or someone you love has suffered an injury resulting from someone else’s negligence, you may be entitled to an insurance settlement to cover the cost of medical bills, lost wages, and other expenses. Your next best step is to contact an experienced personal injury attorney.

The California personal injury attorneys at the Law Offices of Samer Habbas can fight for the compensation you deserve. For more information or to schedule a free consultation with an experienced Orange County personal injury attorney, call the Law Offices of Samer Habbas today at 949-727-9300.