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Some of the First Cases  

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Comunale v. Traders & Gen. Ins. Co  In Comunale v. Traders & Gen. Ins. Co., 50 Cal. 2d 654 (1958), the  insurance company wrongfully refused to defend its insured who had been  sued in the underlying action for damages arising out of an automobile  accident. It also refused to conclude the suit after receiving an offer  of settlement for about 25 percent of the ultimate judgment obtained  against its insured. The refusal resulted in an excess judgment against  its insured. In the subsequent bad faith action the insurer was held  liable for the entire judgment including the excess limits and other  resulting damages. This was clearly an extra-contractual recovery since  under a straight breach of contract claim the insurer would have been  liable for only the amount of the policy.  Critz v. Farmers Ins. Group  The court in this case held that a wrongful refusal to settle sounded  only in contract was expressly disapproved. The court stated that, in  determining whether to accept a settlement offer, the insurer must give  the interest of the insured at least as much consideration as its own.  When there is a great risk of an excess judgment, good faith requires  acceptance of an offer within policy limits.    Crisci v. Security Ins. Co.  In Crisci v. Security Ins. Co., 66 Cal. 2d 425, 58 Cal. Rptr. 13 (1967),  Crisci, an underinsured landlady, was sued by a tenant who fell on a  staircase. Her liability policy had a limit of $10,000, which was 25% of  the $40,000 claimed damages. However, prior to trial the tenant\\u2019s  demand was substantially reduced and he expressed a willingness to  settle the case for $10,000. In spite of strong evidence of both  liability and substantial damages, the defendant insurance company  refused to settle for more than $3,000. A final settlement offer of  $9,000, of which Crisci agreed to pay $2,500, was likewise rejected.  Following a jury trial in the underlying action, the tenant received a  judgment for $100,000, of which the insurance company paid the $10,000  policy limit. Crisci was unable to pay the remaining $90,000 and was  rendered indigent.  \\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/