28th Mar 2018

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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.

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