Insurance 101 – Chapter 11 – Volume 59 – Suspending the Duty of Good Faith

Suspending the Duty of Good Faith

Most courts consider litigation to be an adversary proceeding which, once instituted, suspends the duty of good faith. However, the California Supreme Court, on the last day the Rose Bird Court was in power, ruled that the duty of good faith and fair dealing continued after litigation had commenced between the insured and the insurer. White v. Western Title, 40 Cal. 3d 870, 221 Cal. Rptr. 509 (December 31, 1985). The present California Supreme Court has been chopping away at White issue by issue. It appears that the basic holding of White will be rejected by the present California Supreme Court if the Court is given the opportunity. It is, however, the law. For that reason insurers in  California always seek a waiver of the holding of White v. Western Title before starting negotiations on any claim where there is a potential for a bad faith claim. Justice Kaus, in his dissent to the majority opinion in White v. Western Title, gave a warning to all insureds and attorneys for insureds in what may be a precursor of future decisions.

The following video was adapted from my book, “Insurance Claims A Comprehensive Guide” Published by the National Underwriter Company and is available at the Zalma Insurance Claims Library

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The author and publisher disclaim any liability, loss, or risk incurred as a consequence, directly or indirectly, of the use and application of any of the contents of this blog. The information provided is not a substitute for the advice of a competent insurance, legal, or other professional. The Information provided at this site should not be relied on as legal advice. Legal advice cannot be given without full consideration of all relevant information relating to an individual situation.

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