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Avoid Creating Coverage By Estoppel, Waiver & Forfeiture: California

Waiver, estoppel and forfeiture are doctrines on which insureds often rely to try to create coverage outside the terms of the insurance policy. Insureds will often assert that they are entitled to such extra-contractual coverage based entirely on how the insurer handled the claim.  But under California law, these doctrines often do not apply, and an insurer can avoid a potential waiver, estoppel or forfeiture by communicating with the insured. Although the terms are often used interchangeably, the doctrines are different. Estoppel refers to conduct by the insurer that reasonably causes an insured to rely to his detriment. Waiver is an express or implicit intentional relinquishment of a known right demonstrated. And forfeiture is the assessment of a penalty against

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Recent Bad Faith Cases Regarding Reasonableness of Medical Treatment

In two recent cases, the courts showed substantial deference to patients’ treating physicians in determining the reasonableness of medical treatment. This deference appears to reflect a reluctance of courts to decide what healthcare is appropriate for a patient. In Peterson v. Western National Mut. Ins. Co., 946 N.W.2d 903 (Minn. 2020), the policyholder was involved in a low-speed automobile accident. Following the accident, she sought treatment from a chiropractor for body aches and headaches. She entered into a settlement with the other driver and her insurer also paid her policy’s no-fault benefits. For two to three years following the accident, the insured underwent various treatments for her headaches. Eventually, she tried Botox injections, which she found effective. The insured’s treating

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Posted in Bad Faith

Form and Substance: The Importance of Conducting a Proper Investigation of First-Party Claims Under California Law

A bad faith claim against an insurer often focuses as much on the process of a claims investigation as it does on the substance of a claims decision itself. If the coverage decision was wrong (but not unreasonable), and the investigation was thorough, there may be liability for breach of contract, but there is a reduced risk of liability for bad faith. In contrast, if the coverage decision was wrong, and the insurer also failed to investigate the claim properly, there is a heightened risk of bad faith. Because of this, a proper investigation of the claim is vital to preventing (or defeating) an insured’s bad faith claim. Egan v. Mutual of Omaha Insurance Company, 24 Cal.3d 809 (1979), is

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Posted in Bad Faith
Avoiding Insurance Bad Faith
Cozen O’Connor represents insurance clients in jurisdictions throughout the U.S. against statutory and common law first- and third-party extracontractual claims for actual and consequential damages, penalties, punitive and exemplary damages, attorneys’ fees and costs, and coverage payments. Whether bad faith claims are addenda to a broader coverage matter or are central to the complaint, Cozen O’Connor attorneys know how to efficiently respond to extracontractual causes of action. More
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