California Insurance Litigation Blog

California Insurance Litigation Blog

Category Archives: Insurance Bad Faith

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What’s a Policyholder to Do? California Court Permits “Conditional Judgment” Awarding Replacement Cost to Policyholders

Posted in Breach of Contract, Case Updates, Commercial General Liability Insurance, Insurance Bad Faith, Property & Casualty Insurance
When a covered property is damaged, the insured may face a quintessential Catch-22—the insured cannot afford to proceed with costly repairs or replacement without insurance money, but until the repairs or replacements are finished, the insured cannot recover under the replacement cost provision of the liability policy.  A recent court decision held a policyholder must … Continue Reading

Insurers Have a Duty to Defend Where a Complaint Could Be Fairly Amended to State a Covered Liability; California Supreme Court Clarifies Duty to Defend Disparagement Claims Under Advertising Injury Coverage

Posted in Breach of Contract, Case Updates, Commercial General Liability Insurance, Insurance Bad Faith
An insurer has a duty to defend even if the causes of action in a lawsuit are not expressly covered by a liability policy if the factual allegations may support a potentially covered claim.  This was expansive interpretation of the duty to defend adopted by the United States District Court Southern District of California in … Continue Reading

Expert Testimony Can Help Policyholders Establish Property Damage and Survive Summary Judgment

Posted in Breach of Contract, Case Updates, Commercial General Liability Insurance, Expert Testimony, Insurance Bad Faith
Policyholders often face a formidable challenge proving causation on property damage claims, particularly when insurance companies insist on deferring to their own experts and adjustors.  Of course, insurance companies must conduct reasonable investigations and review and evaluate all of the evidence before making a claim decision.  The Ninth Circuit Court of Appeals held in an … Continue Reading

Policyholder Wins Handed Down in Insurance Decisions. Daily Journal Publishes McKennon Law Group PC Article.

Posted in Breach of Contract, Case Updates, Disability Insurance, Duty to Defend, Duty to Settle, ERISA, Insurance Bad Faith, News, Unfair Business Practices/Unfair Competition
The February 10, 2014 edition of the Los Angeles Daily Journal featured Robert McKennon’s article entitled:  “Policyholder Wins Handed Down in Insurance Decisions.”  In it, Mr. McKennon discusses six insurance decisions handed down in California and federal courts in 2013 that were favorable to policyholders.  … Continue Reading

Clearing Up Murky Waters: Insurer’s Duty to Settle. Daily Journal Publishes McKennon Law Group PC Article.

Posted in Breach of Contract, Duty to Settle, Insurance Bad Faith
The October 29, 2013 edition of the Los Angeles Daily Journal featured Robert McKennon’s article entitled:  “Clearing Up Murky Waters: Insurer’s Duty to Settle.”  In it, Mr. McKennon discusses the  California Court of Appeal’s decision in Reid v. Mercury Insurance Company, 2013 DJDAR 13436 (Cal. App. 2nd Dist. Oct. 7, 2013).  The Reid case followed … Continue Reading

Want to Open Up the Policy Limits on a Policy? Try Making a Section 998 Offer Above Policy Limits and You Just May Be Able to Do It

Posted in Auto Insurance, Breach of Contract, Duty to Settle, Insurance Bad Faith
Can a pretrial California Code of Civil Procedure section 998 offer to settle above an insurer’s policy limits result in opening up a policy’s liability limits?  Interestingly, a California Court of Appeal has said “yes” to this question under certain limited circumstances if the offer is reasonable and made in good faith.  In Aguilar v. … Continue Reading

Alas, A Very Hot Issue in California Insurance Law is Decided (At Least for Now): Insurers Have No Affirmative Duty to Settle as Long as They Do Not Foreclose the Possibility of Settlement and/or Absent a Within-Policy-Limits Settlement Demand

Posted in Auto Insurance, Breach of Contract, Duty to Settle, Insurance Bad Faith
One of the hottest issues in California insurance law has been whether a breach of the good faith duty to settle can be found in the absence of a within-policy-limits settlement demand, thus giving rise to an insurer’s liability for an excess judgment… Continue Reading

Property Insurers May Be Liable to Owners for Loss of Rents Resulting from Damaged Property

Posted in Breach of Contract, Case Updates, Insurance Bad Faith, Policy Interpretation, Property & Casualty Insurance
Commercial property owners may recover lost rental income from their insurer if they are unable to rent out damaged property, absent clear policy exclusions.  The California Court of Appeal recently held the owner of commercial property has a reasonable expectation of coverage for loss of rent, even if the property was not leased out at … Continue Reading

California Court of Appeal Finds That a 10:1 Ratio Between Punitive Damages and Compensatory Damages Awards Satisfies Due Process

Posted in Breach of Contract, Case Updates, Insurance Bad Faith, Punitive Damages
A 10-to-1 ratio of punitive damages to compensatory damages awards in an insurance bad faith case passes Constitutional muster.  So says the California Court of Appeal in its decision in Nickerson v. Stonebridge Life Insurance Company, __ Cal. App. 4th ___, 2013 Cal. App. LEXIS 583 (2013).  The decision is significant in that it affirms … Continue Reading

Supreme Court Reaches Favorable Decision for Insureds in Zhang v. Superior Court of San Bernardino; Daily Journal Publishes McKennon Law Group PC Article on Zhang

Posted in Case Updates, Insurance Bad Faith, Unfair Business Practices/Unfair Competition
The Wednesday August 7, 2013 edition of the Los Angeles Daily Journal featured Robert McKennon’s article entitled:  “Clear win for insureds, though scope uncertain.”  In it, Mr. McKennon discusses how a highly anticipated decision by the California Supreme Court in Zhang v. Superior Court of San Bernardino (California Capital Insurance), 2012 DJDAR 10174, expands the … Continue Reading

California Court Holds That Third-Party Plaintiffs Can Bring Claims Against Defendant’s Insurer for Breach of Contract and Bad Faith After a Settlement

Posted in Case Updates, General Liablity, Insurance Bad Faith
In a case of first impression, the California Court of Appeal for the Sixth District held that a plaintiff who sued a defendant and settled the case can later sue the defendant’s insurer directly for breach of contract and bad faith concerning a medical expense provision.  This unprecedented decision potentially opens a new avenue for … Continue Reading

The Important Potential Implications of Zhang v. California Capital Insurance Co. For Insurance Litigation in California

Posted in Case Updates, Insurance Bad Faith, Unfair Business Practices/Unfair Competition
After much anticipation, last week the Supreme Court of California heard oral arguments in the pivotal case of Yanting Zhang v. California Insurance Co., S178542 on May 8, 2013.  This case looks to have a substantial impact on insurance litigation in California and could open up another significant avenue for insureds to pursue claims against … Continue Reading

Reasonable Interpretation of Statute Does Not Preclude Triable Issue of Fact on Insurance Bad Faith Claim

Posted in Duty to Defend, Insurance Bad Faith, Property & Casualty Insurance
A recent California Court of Appeals decision sought to clarify the application of California Insurance Code Section 533.5(b) concerning the statute’s preclusion of an insurer’s duty to defend its insured in criminal actions.  In Mt. Hawley Insurance Co. v. Richard Lopez, Jr.,__Cal.App.4th___, 2013 Cal. App. LEXIS 346 (May 1, 2013) the Court of Appeals held … Continue Reading

Filing an Insurance Claim can be Protected Conduct Under Anti-SLAPP Law

Posted in Case Updates, Insurance Bad Faith, Property & Casualty Insurance
You have been probably wondering whether the filing of an insurance claim constitutes prelitigation activity that is protected under the anti-SLAPP statute, right?  Well, if you were, you now have an answer:  it is a resounding “maybe.” In People ex rel. Fire Insurance Exchange v. Anapol, 211 Cal. App. 4th 809 (2012), the California Court … Continue Reading

Insurance Companies Must Show “Substantial Prejudice” to Deny Claims for a Failure to Comply With the Proof of Loss Requirement

Posted in Breach of Contract, Case Updates, Fire Insurance, Homeowners Insurance, Insurance Bad Faith, Unfair Business Practices/Unfair Competition
Following the August 2009 Station Fire, the lawsuits of over 1,440 policyholders filed against Fire Insurance Exchange (“FIE”) and related insurers were consolidated into one case – Henderson v. Farmers Group, Inc., __ Cal.App.4th __, 2012 Cal. App. LEXIS 1108 (October 24, 2012).  In this case, the California Court of Appeal, Second Appellate District, issued … Continue Reading

The Ninth Circuit Amends Opinion in Du v. Allstate removing policyholder friendly language

Posted in Auto Insurance, Case Updates, General Liablity, Insurance Bad Faith
We recently wrote about a policyholder friendly opinion by the Ninth Circuit Court of Appeals that seemingly held that an insurer’s duty of good faith and fair dealing, which is implied in every contract of insurance, may be violated by the insurer’s failure to attempt to effectuate a settlement within policy limits after liability of … Continue Reading

An Insurance Company Cannot Shield Itself from Negligence Liability by Filing an Interpleader

Posted in Breach of Contract, Case Updates, Insurance Bad Faith, Interpleader, Negligence
In Lee v. West Coast Life Insurance Company, 2012 U.S. App. LEXIS 15768 (9th Cir. July 31, 2012), the Ninth Circuit Court of Appeals ruled that a stakeholder insurance company cannot use an interpleader filing to shield itself from tort liability for its negligent actions.  With this holding, the Court of Appeals confirmed that “where … Continue Reading

Bad Faith Liability May Be Premised on an Insurer’s Failure to Effectuate Settlement When Insured’s Liability Was Reasonably Clear

Posted in Assignment of Claim, Auto Insurance, Case Updates, General Liablity, Insurance Bad Faith
The Ninth Circuit Court of Appeals in a recent decision held that an insurer’s duty of good faith and fair dealing, which is implied in every contract of insurance, may be violated by the insurer’s failure to attempt to effectuate a settlement within policy limits after liability of its insured has become reasonably clear.  In … Continue Reading

FAQs: Who May Sue or Be Sued for Insurance Bad Faith?

Posted in Insurance Bad Faith, Insurance Questions and Concepts
The McKennon Law Group PC periodically publishes articles on its California Insurance Litigation Blog that deals with frequently asked questions in the insurance bad faith and ERISA area of the law.  This is another such article in that series. Generally, in order to sue for insurance bad faith there necessarily must be an insurance policy … Continue Reading

California Court of Appeal Affirms Ruling That a Mental Disorder Accompanied by Physical Symptoms is Not Subject to a Policy’s Two-Year Limitation for Mental Claims

Posted in Disability Insurance, Insurance Bad Faith, Policy Interpretation
In 2009, the California Court of Appeal in Bosetti v. The United States Life Ins. Co., 175 Cal. App. 4th 1208 (2009) addressed whether a two-year benefits limitation on disability insurance payments for “mental, nervous or emotional disorder[s]” could properly serve to limit benefits payable to an insured who was disabled from depression and anxiety, … Continue Reading

Insurers Cannot Escape Bad Faith Liability By Relying On In-House Experts And The “Genuine Dispute Doctrine”

Posted in Disability Insurance, ERISA, Insurance Bad Faith, Punitive Damages
Insurers often wrongfully deny policy benefits to their insureds in situations where there may be some uncertainty as to coverage.  Despite an overarching duty to act reasonably and find in favor of coverage in such situations, insurers often will deny coverage and rely on their in-house medical experts’ (i.e., nurses, doctors) analysis and opinions as … Continue Reading

Why Does The Pollution Exclusion in California Insurance Policies Exclude Asbestos Building Contamination But Not Pesticide Building Contamination?

Posted in Case Updates, Commercial General Liability Insurance, Duty to Defend, Homeowners Insurance, Insurance Bad Faith, Legal Articles, Policy Interpretation, Property & Casualty Insurance
According to a recent California appellate court decision, a contractor’s negligent release of asbestos fibers during the removal of asbestos-containing acoustical spray in a condominium complex is excluded by the pollution exclusion in a homeowner association’s property and liability policy, despite a 2003 California Supreme Court ruling that a contractor’s negligent spraying of pesticide in … Continue Reading