Comunale v. Traders & General Insurance Company
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.
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