The California Supreme Court decided a bad faith case last week. See Wilson v. 21st Century Ins. Co., No. S 141790 (Cal. Sup. Ct. Nov. 29, 2007). In Wilson, eight months after the plaintiff policy holder was injured, the insurer rejected her demand for payment of the $100,000 policy limit on her underinsured motorist coverage. Although the plaintiff's doctor found her injury was "almost certainly" caused by the automobile accident, the insurer rejected the claim, asserting plaintiff had only suffered soft tissue injuries and had preexisting degenerative disc disease. Based, however, on the undisputed facts, a jury could reasonably find the insurer reached its medical conclusion without a good faith investigation of the claim and without a reasonable basis for genuine dispute. Consequently, the California Supreme Court affirmed the Court of Appeal's reversal of a summary judgment in favor of the insurer. The Wilson case is attached Scan001.PDF.
Hawai`i recognizes in both a first- and third-party insurance contract that the insurer must act in good faith in dealing with its insured and a breach of that duty of good faith gives rise to an independent tort cause of action. See Enoka v. AIG Hawai`i Ins. Co., 109 Hawai`i 537, 549, 128 P.3d 860 (2006).
