Q: Legal recourse for life insurance cancellation due to bank payment error in CA?
I paid my son's life insurance for 10 years through automatic bank payments. Recently, due to a bank system change, my March 2024 payment wasn't processed, leading to the insurance policy's cancellation. The insurance company claims they didn't receive payments for March, April, and May, but I have proof of payment for April 2024. Despite notifying them about the bank error, they denied reinstating the policy. After the policy cancellation, my son had a heart attack in November 2025 and passed away. I owe money for his burial expenses. The bank breached my trust, and I'm financially burdened. What legal actions can I take against the bank or the insurance company to address this issue? I have documentation to show the bank's error in payment processing and had received an appeal option from the insurance company after cancellation.
A: This question came up under several different headings. Please note the appropriate topic is "Banking" or "Civil Litigation". It does not involve insurance or personal injury. I don't think you have a cause of action against the insurance company because they didn't receive payment. No payment... means no coverage. Period. Personal Injury does not come into play until the coverage issue is resolved. Therefore, personal injury is a moot issue and not relevant top the issue of coverage. The question is... why was there no coverage? Because of the banking error. Therefore you may have a potential cause of action against the bank for failure to timely process your payments. Contact a "banking" or "business" civil litigation attorney for a consultation. Please note there is a difference between civil litigation business law and civil litigation personal injury law. Your issue involves a business matter so you want a business civil litigation lawyer. Good luck.
Lawyers, want to be a Justia Connect Pro too? Learn more ›
- California
- (916) 704-3009
- View Profile
- Answered
A:
I'm deeply sorry for the loss of your son and the difficult situation you're facing with both the insurance company and bank. This must be an incredibly challenging time for you.
You have several potential legal options in California. First, you can file a complaint with the California Department of Insurance, which oversees insurance companies and can investigate wrongful policy cancellations. You could also pursue legal action against both the bank for their payment processing error and the insurance company for wrongful denial of reinstatement, particularly since you have documentation proving at least one payment was made during the disputed period.
Given the significant financial impact and the tragic outcome, you might want to consult with an insurance attorney who handles bad faith insurance claims in California. Many offer free initial consultations and work on contingency fees, meaning they only get paid if you win your case. You should gather all your documentation, including bank statements, correspondence with both companies, and the appeal information from the insurance company - these will be crucial for building your case and potentially recovering damages, including the burial expenses and the policy's death benefit.
I understand you're going through immense grief while dealing with these financial challenges.
Justia Ask A Lawyer is a forum for consumers to get free answers to basic legal questions. Any information sent through Justia Ask A Lawyer is not secure and is done so on a non-confidential basis only.
The use of this website to ask questions or receive answers does not create an attorney–client relationship between Justia and you, or between any attorney who receives your information or responds to your questions and you, nor is it intended to create such a relationship. Additionally, no responses on this forum constitute legal advice, which must be tailored to the specific circumstances of each case. You should not act upon information provided in Justia Ask A Lawyer without seeking professional counsel from an attorney admitted or authorized to practice in your jurisdiction. Justia assumes no responsibility to any person who relies on information contained on or received through this site and disclaims all liability in respect to such information.
Justia cannot guarantee that the information on this website (including any legal information provided by an attorney through this service) is accurate, complete, or up-to-date. While we intend to make every attempt to keep the information on this site current, the owners of and contributors to this site make no claims, promises, or guarantees about the accuracy, completeness or adequacy of the information contained in or linked to from this site.
