Bad Faith Tort Claims Only Available Against Insurers


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Plaintiffs Gina Chu, et al, appealed the trial court’s order dismissing with prejudice their claims against defendant for breach of the implied covenant of good faith and fair dealing (bad faith claim) and violation of the Unfair Competition Law.  In Gina Chu et al. v. Old Republic, B302792, Court Of Appeal Of The State Of California (January 29, 2021) the Court of Appeal considered the difference between insurance and home protection contracts.


ZALMA OPINION


Since it does not contain the language of the standard fire policy a Home Protection Contract does not qualify as insurance. For example, California Insurance Code Section 22 provides “Insurance is a contract whereby one undertakes to indemnify another against loss, damage, or liability arising from a contingent or unknown event.” It seems to me that the court’s argument is sufficient to do away with the tort of bad faith because insurance would seem to compensate the homeowner adequately for the type of damages contemplated by the parties at the time of contracting.