Some of the First Cases

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Comunale v. Traders & Gen. Ins. Co

In Comunale v. Traders & Gen. Ins. Co., 50 Cal. 2d 654 (1958), the insurance company wrongfully refused to defend its insured who had been sued in the underlying action for damages arising out of an automobile accident. It also refused to conclude the suit after receiving an offer of settlement for about 25 percent of the ultimate judgment obtained against its insured.

Critz v. Farmers Ins. Group

The court in this case held that a wrongful refusal to settle sounded only in contract was expressly disapproved. The court stated that, in determining whether to accept a settlement offer, the insurer must give the interest of the insured at least as much consideration as its own. When there is a great risk of an excess judgment, good faith requires acceptance of an offer within policy limits.