First Party Bad Faith – 2
An insurer is sometimes considered to be like a fiduciary to its insured. 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. The evidence against him, gathered by the Fire Insurance Exchange and police authorities was damning. The California Supreme Court found that even though there was sufficient evidence to try the insured for felony insurance fraud, the duty of good faith and fair dealing required the insurer to further investigate evidence of innocence brought out for the first time during the insured’s criminal trial for fraud.
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