13th Jan 2015
After an initial denial of coverage, an insured may request reconsideration of the insurer’s denial of coverage. The request may be coupled with additional information, which information may serve as extrinsic facts. [El-Com Hardware v. Fireman’s Fund (2001) 92 Cal.App.4th 205, 217] See § D25 DENIAL OF COVERAGE [§ D25:8 Reconsideration of denial of coverage must be considered by insured’s counsel throughout the litigation].
An insurer learning of facts or law while a coverage suit is pending rendering the coverage suit “ill founded” may not continue to properly maintain the coverage suit simply because it was tenable. [Dalrymple v. USAA (1995) 40 Cal.App.4th 497, 525] See § K4 KNOWLEDGE OF INSURER AT COMMENCEMENT [§ K4:5.3 Duty to change decision; new facts render decision “ill founded”].
Re-tender – after suit is commenced
An insured is permitted multiple opportunities to “re-tender”, requesting a defense to the third party suit. This re-tender should be accompanied by a detailed statement of facts along with a legal discussion of law applicable to the coverage. See North Counties Engineering v. State Farm (2014) 224 Cal.App.4th 902, 911-912 (State Farm denied coverage on a policy with a declarations page dated 2004; this denial existed for two years after the third party suit was brought against the insured; repeated re-tendering on behalf of insured brought to light a State Farm policy declarations page dated 1999 which had coverage for products-completed operations)]
References in bold are to Mr. Cornblum’s legal text CALIFORNIA INSURANCE LAW DICTIONARY AND DESK REFERENCE (2014), published by ThomsonReuters (1-800-344-5008). Those with WestLaw can search using the database CAINLAWDDR.