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Silberg and Egan and Why There is a Tort of Bad Faith  

https://zalma.com/blog

In Silberg v. California Life Ins. Co., 11 Cal. 3d 452 (1974), the  insurer advertised an accident policy with the phrase \\u201cProtect Yourself  Against the Medical Bills That Can Ruin You.\\u201d It issued an accident  policy to Mr. Silberg. The policy excluded injuries covered by workers\\u2019  compensation. Silberg was injured while performing incidental services  at his place of employment. His employer\\u2019s compensation carrier denied  coverage. Mr. Silberg found himself with substantial medical bills which  California Life also refused to pay.  Many courts recommend that the two insurers attempt to agree to share  the costs equally and work out their differences later. If such an  agreement cannot be reached then the company you represent should front  the money under a reservation of rights, take an assignment from the  insured, and sue, in the insured\\u2019s name, the other insurer for all the  money paid plus damages incurred by the insured.  In Egan v. Mutual of Omaha Insurance Company Egan was allowed to retain  both compensatory and punitive damages as a result of the bad faith  conduct of the insurer since he was able to prove the four elements  required by the Supreme Court because the insurer wrongfully accused him  of fraud and cut off his disability payments.  For the insurer to fulfill its obligation not to impair the right of the  insured to receive the benefits of the agreement, it again must give at  least as much consideration to the latter\\u2019s interests as it does to its  own. The insured in a contract like the one before us does not seek to  obtain a commercial advantage by purchasing the policy, rather he seeks  protection against calamity.  An insurer is sometimes considered to be like a fiduciary, although it  is never a fiduciary, to its insured. In Frommoethelydo v. Fire  Insurance Exchange, 42 Cal. 3d. 208, 228 Cal. Rptr. 160 (1986), Mr.  Frommoethelydo was arrested and tried on charges of insurance fraud, he  was tried and acquitted. The Supreme Court found the failure of the  insurer to investigate the basis of the acquittal was evidence of bad  faith.  \\xa9 2021 \\u2013 Barry Zalma  Barry Zalma, Esq., CFE, now limits his practice to service as an  insurance consultant specializing in insurance coverage, insurance  claims handling, insurance bad faith and insurance fraud almost  equally for insurers and policyholders. He also serves as an arbitrator  or mediator for insurance related disputes. He practiced law in  California for more than 44 years as an insurance coverage and claims  handling lawyer and more than 52 years in the insurance business. He is  available at http://www.zalma.com and zalma@zalma.com.  Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE  Legend Award.  Over the last 53 years Barry Zalma has dedicated his life to insurance,  insurance claims and the need to defeat insurance fraud. He has created  the following library of books and other materials to make it possible  for insurers and their claims staff to become insurance claims  professionals.  Go to the podcast Zalma On Insurance at https://anchor.fm/barry-zalma;  Follow Mr. Zalma on Twitter at https://twitter.com/bzalma; Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; Go to the Insurance Claims Library \\u2013 https://zalma.com/blog/insurance-claims-library/ Read posts from Barry Zalma at https://parler.com/profile/Zalma/posts; and the last two issues of ZIFL at https://zalma.com/zalmas-insurance-fraud-letter-2/