Insurance Law

Recent Developments in California Bad Faith Law and Related Trends

By Tyler Gerking

On July 29, 2014, I spoke on a panel about recent developments in California bad faith law and related trends. My co-presenter was Robert K. Scott of The Law Offices of Robert K. Scott, and we gave the presentation at ACI’s 28th National Advanced Forum on Bad Faith Claims & Litigation in San Francisco. The title of the presentation was “The Positions of the Policyholder’s Bar: How insurers can avoid bad faith claims and tailoring your litigation strategies to the latest wave of first-party and third-party claims.” Some of the highlights included:

•   the recent trend of bad faith claims handling conduct by insurers in responding to defense cost submissions by independent counsel under Section 2860, [enhanced version available to lexis.com subscribers], including the hiring of outside auditors to justify reduced insurer payments on defense bills;

•   the state of the “genuine dispute” doctrine in bad faith claims arising out an insurer’s breach of the duty to defend (i.e., Mt. Hawley v. Lopez, 215 Cal. App. 4th 1385 (2013)), [enhanced version available to lexis.com subscribers]; and

•   2013 case law on whether insurers have an affirmative duty to proactively seek settlement in excess-of-limits exposure cases (i.e., Reid v. Mercury Ins. Co., 220 Cal. App. 4th 262 (2013), [enhanced version available to lexis.com subscribers], and Travelers Indem. Of Conn. v. Arch Specialty Ins. Co., 2013 U.S. Dist. LEXIS 169453, [enhanced version available to lexis.com subscribers] (E.D. Cal. Nov. 26, 2013)). See John Green’s article about Reid posted on this blog.

These are evolving areas of law that are likely to produce further disputes between insurers and insureds. Early insurance coverage advice can help avoid these disputes, or at least position the insured for a more favorable outcome if litigation becomes necessary. I’ll be writing in more detail about these on this blog over the next couple months.

  Tyler C. Gerking, Partner, Farella Braun + Martel LLP

Read additional articles on legal developments that affect policyholders at the Policyholder Perspective blog.

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