The California Supreme Court determined that insurance practices violating the state's Unfair Insurance Practices Act (UIPA) could support a claim under the state's unfair competition law (UCL). Zhang v. Superior Court, 57 Cal. 4th 353 (2013).

   Zhang purchased a CGL policy from California Capital Insurance Company. She sued California Capital in a dispute over coverage for fire damage to her commercial property. The complaint included causes of action for breach of contract, breach of the implied covenant of good faith and fair dealing, and violation of the UCL. In her UCL claim, Zhang alleged that California Capital had "engaged in unfair, deceptive, untrue, and/or misleading advertising" by promising to provide timely coverage in the event of a compensable loss, when it had no intention of paying the true value of the insureds' covered claims. 

   Zhang specifically alleged unreasonable delays causing deterioration of her property; withholding of policy benefits; refusal to consider cost estimates; misinforming her as to the right to an appraisal; and falsely telling  her mortgage holder that she did not intend to repair the property, resulting in foreclosure proceedings.

   The trial court sustained California Capital's demurrer based upon a perceived bar against private actions for unfair insurance practices. The Court of Appeal reversed, holding Zhang's false advertising claim was a viable basis for her UCL cause of action.

   The Supreme Court affirmed the Court of Appeals. The UCL defined "unfair competition" as "any unlawful, unfair, or fraudulent business act or practice and unfair, deceptive, untrue or misleading advertising." A private plaintiff could  bring a UCL action by showing economic injury caused by unfair competition. 

   The UIPA allowed only administrative enforcement by the Insurance Commissioner. Private UIPA actions were barred. A litigant could not rely on prohibited activities by insurers as set for in the UIPA as the basis for a UCL claim. However, when insurers violated both the UIPA and obligations imposed by other statutes or the common law, a UCL action could lie. The Legislature did not intend the UIPA to operate as a shield against any civil liability. 

   Hawaii also has an unfair competition law similar to California's. See Haw. Rev. Stat. 480-2. Claims under the Hawaii unfair competition law may only be pursued by "consumers," defined as natural persons. Haw. Rev. Stat. 480-1. The Ninth Circuit has predicted that the Hawaii Supreme Court would not find that the Insurance Code's unfair methods of competition would preempt suits against insurers for unfair trade practices in violation of section 480-2. Jenkins v. Commonwealth Land Title Ins. Co., 95 F.3d 791, 797 (9th Cir. 1996).