CALIFORNIA SUPREME COURT GRANTS REVIEW IN IMPORTANT CASE CONCERNING BAD FAITH IN CONTEXT OF UNINSURED/UNDERINSURED MOTORIST POLICIES

On April 26, 2006, the California Supreme Court unanimously granted review in Wilson v. 21st Century Insurance Co., Case No. S141790, a case with important implications for insurers adjusting uninsured/underinsured motorist (UM/UIM) claims.

Plaintiff was injured in an accident with an underinsured motorist. Plaintiff's insurer, 21st Century, initially denied underinsured motorist (UIM) benefits and plaintiff brought suit for breach of contract and bad faith. 21st Century successfully moved for summary judgment. In reversing summary judgment for 21st Century, the Court of Appeal, Second District, Division Seven, criticized 21st Century's failure to consult with any physicians before denying UIM benefits, noting "there appear to be obvious avenues of inquiry in support of the claim [such as requesting an independent medical exam] which the insurer could have pursued but did not." The court also held that a reasonable evaluation of a UIM claim must entail a determination of "the probable award the insured would receive from a jury if she were to file a negligence action against the other driver." The court observed that "valuation by a claims adjuster without input from experienced trial counsel may be insufficient to discharge the insurer's duty to perform a complete review of the claim." As a result of the Supreme Court's grant of review, the Court of Appeal's decision is no longer available as a citable precedent.

Horvitz & Levy LLP represents the defendant in this case. For additional information, please contact Barry Levy or Brad Pauley at (818) 995-0800 or by e-mail to blevy@horvitzlevy.com or bpauley@horvitzlevy.com.

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