28th Mar 2018
Bad faith allegations regarding breach of duty
Bad faith allegations regarding an insurer’s breach of the duty of fair dealing and good faith for failure to defend include:
1. failure to conduct a reasonable, timely, and unbiased investigation to fully evaluate the request for a full defense [see § I80 INVESTIGATE: DUTY OF INSURER – DUTY TO DEFEND]
2. failure to respond in a timely manner [see § D85:1.03 Immediate defense required]
3. refusal to honor its obligations under the policies [§ P67 POTENTIAL LIABILITY UNDER POLICY [§ P67:10 Proof of potential coverage under the policy for underlying claim against insured]].
4. misrepresentations pertaining to policy provisions [see § B3 BAD FAITH LAWSUIT – THIRD PARTY [§ B3:2.01 Bad faith; improper conduct prohibited by insurer; inaction of insurer may be bad faith]]
5. basing the coverage decisions on a desire to reduce and/or avoid obligations to the insured, thus refusing to afford it a defense [see § C32.03 CLAIMS HANDLING AND TACTICS [§ C32.03:5.1 Intentionally dishonest claims adjusting]; § B3 BAD FAITH LAWSUIT – THIRD PARTY [§ B3:2.02 Proving bad faith denial of a duty to defend and/or refusal to settle by cross-examination of the insurance company adjuster]
6. Punitive damages. Insurer using every conceivable argument to deny coverage [Pulte Home Corp. v. American Safety Indem (2017) 14 Cal. App. 5th 1086, 1125-1126] See § P123 PUNITIVE DAMAGES [§ P123:3.4].
All of the above grounds are discussed in Pulte Home Corp. v. American Safety Indem. (2017) 14 Cal. App. 5th 1086, 1098, 1125-1126.
References in bold are to Mr. Cornblum’s text CALIFORNIA INSURANCE LAW DICTIONARY AND DESK REFERENCE, 2017 Edition, published by ThomsonReuters (1-800-344-5008 to order 3-Volume text). 2018 Edition due out in June 2018.