In California, insurance carriers seeking to avoid allegations of committing bad faith, whether in litigation or not, will often ask insureds if they are willing to enter into “White waiver” agreements. The purpose of such an agreement is to allow an insurance carrier to make offers of settlement without fear of the amount of the settlement being used as evidence against the carrier for bad faith, if the perceived amount of the settlement offer is too low.
Continue Reading Should Policyholders Sign a “White Waiver” Agreement?

The California Court of Appeal recently issued an opinion confirming the standard for determining an insurer’s bad faith conduct is whether the insurer acted unreasonably, not whether the insurer refused to pay a reasonable claim. I recently blogged about the California standards for proving bad faith.1 About a week after that blog post, lawyers for Pacific Specialty Insurance Company asked a Los Angeles judge to enter summary judgment against a Merlin client’s bad faith claims because bad faith was supposedly an intentional tort (i.e., the insured needed to prove intent to harm). Not surprisingly, the judge ruled in our client’s favor and rejected this argument. As noted in the blog post, bad faith only requires proof the insurer acted “unreasonably.” About a week later, California’s Second Appellate District Court confirmed in a separate case that bad faith only requires evidence of “unreasonable” conduct.2 Sorry, Pacific Specialty.
Continue Reading California Appellate Court Confirms the Standard for Bad Faith is Whether the Insurer Acted “Reasonably”

If you’re a repeat reader of the Property Insurance Coverage Law Blog, you have likely come across a reference to one of Bill Wilson’s most important policy interpretation doctrines: RTFP!1 or “Read the full policy.” But what happens when you encounter a conflict not contemplated in the policy? Or worse yet, are not aware that consumer protections exist that can assist claim handling and broaden or clarify coverage?
Continue Reading 2021 California Legislative Update: Assembly Bill 3012

Most California authorities say that the “implied covenant of good faith and fair dealing” obligates the insurer to investigate, process, and evaluate the insured’s claim promptly, thoroughly, and fairly.1 The seminal case describes bad faith as insurer conduct that impairs the insured’s right to receive the benefits for which they contracted.2 My favorite line from case law describes bad faith as an “imprecise label for what is essentially some kind of unreasonable insurer conduct[.]”3
Continue Reading Did the Insurance Company Commit Bad Faith?

We are happy to share with the insurance world a very positive development on COVID-19 Business Interruption cases – from Orange County, a conservative jurisdiction. The credit for this victory goes to our friends at Covington & Burling LLP, who we have been working closely with to advance justice for policyholders. A special shout-out is owed to Rani Gupta, Joan Li, David Goodwin, and Jad Khazem for this win, as the specific allegations of physical alteration were the driving force behind the victory and are instructive for future success.
Continue Reading Court Rules in Favor of Goodwill on COVID-19 Business Interruption Matter

Last week I stumbled across an interesting policy provision thanks to a phone call from another veteran policyholder attorney. The policy provision came in the form of an endorsement that turns a broad form homeowners policy into a Difference in Conditions (“DIC”) policy. The endorsement essentially states that in exchange for a premium credit, the policy excludes coverage for any loss that could be insured under the California FAIR Plan.
Continue Reading California Warning: Some Difference in Conditions Policies Are Misleading Consumers

New laws enacted last month provide further support for California wildfire claimants by requiring carriers provide additional coverages. Only a few years ago, California enacted laws requiring insurers to provide coverage for Additional Living Expenses (ALE) incurred due to a covered loss relating to a state of emergency – almost every massive wildfire – for a period of no less than 24 months. (California Insurance Code Section 2060(b)(1).)
Continue Reading New California Law Require Insurers to Pay Up to 36 Months of Additional Living Expenses and Advance at Least Four Months of Payments Following Wildfires

As wildfires continue to devastate California yet again, countless homes and businesses have been destroyed. The destruction of buildings and other property, however, does not even begin to reflect the actual extent of wildfire damages. Thousands more homes and business have been affected by smoke damage. Unfortunately, some insurance companies will refuse to recognize smoke damage alone if a property was not actually touched by a fire. If you can demonstrate that smoke has indeed affected a building and personal property, then you can also demonstrate damages and the insurer should be held accountable to pay to return the smoke affected property to its pre-loss condition.
Continue Reading The Importance of Demonstrating that Damages Exist in Smoke Damage Insurance Claims

The California Supreme Court emphasized that the notice-prejudice rule in first-party insurance contract is a fundamental public policy that can override a choice-of law provision in certain circumstances.
Continue Reading Is the California Notice-Prejudice Rule a Fundamental Public Policy For Purposes of Choice of Law Analysis?

In California, the combination of both a covered loss and an uncovered loss can still be covered under the Efficient Proximate Cause Doctrine provided that the covered loss is the efficient proximate cause of the loss. California Courts have interpreted California Insurance Code sections 530 and 532 to codify the efficient proximate cause doctrine.
Continue Reading A Primer on the Efficient Proximate Cause Doctrine in California