Although lawyers and insurers believe that the filing of a declaratory relief action to determine coverage is a means of avoiding charges of bad faith, it can be a trap. In Garner v. American Mut. Liability Ins. Co. (1973) 31 Cal.App.3d 843, the California Court of Appeal found that an insurer, who filed a complaint for declaratory relief without good cause, was subject to both damages for bad faith and for malicious prosecution. The insurer had, instead, delegated the duty to investigate and evaluate to a medical review committee.
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