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. The refusal resulted in an excess judgment against its insured. In the subsequent bad faith action the insurer was held liable for the entire judgment including the excess limits and other resulting damages. This was clearly an extra-contractual recovery since under a straight breach of contract claim the insurer would have been liable for only the amount of the policy.

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. 

Crisci v. Security Ins. Co.

In Crisci v. Security Ins. Co., 66 Cal. 2d 425, 58 Cal. Rptr. 13 (1967), Crisci, an underinsured landlady, was sued by a tenant who fell on a staircase. Her liability policy had a limit of $10,000, which was 25% of the $40,000 claimed damages. However, prior to trial the tenant’s demand was substantially reduced and he expressed a willingness to settle the case for $10,000. In spite of strong evidence of both liability and substantial damages, the defendant insurance company refused to settle for more than $3,000. A final settlement offer of $9,000, of which Crisci agreed to pay $2,500, was likewise rejected. Following a jury trial in the underlying action, the tenant received a judgment for $100,000, of which the insurance company paid the $10,000 policy limit. Crisci was unable to pay the remaining $90,000 and was rendered indigent.

© 2021 – Barry Zalma

Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost

equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 52 years in the insurance business. He is available at and

Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.

Over the last 53 years Barry Zalma has dedicated his life to insurance, insurance claims and the need to defeat insurance fraud. He has created the following library of books and other materials to make it possible for insurers and their claims staff to become insurance claims professionals.

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