In Zhang , the plaintiff sued her insurance company in a dispute over coverage for fire damage to her commercial property. She alleged causes of action for breach of contract, breach of the covenant of good faith and fair dealing, and violation of the UCL. We can expect to see a sharp uptick in class action litigation against insurance companies as a result of Zhang as the Court has added a significant tool to the arsenal of claims that can be asserted against the companies. If you would like to learn how Lexology can drive your content marketing strategy forward, please email enquiries lexology.
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California Capital argued that the crux of the UCL claim was improper claims handling, and the allegations of unfair competition and false advertising were nothing more than an attempt to plead around the bar of Moradi-Shalal. The Supreme Court concluded that bad faith insurance practices may qualify as any of the three statutory forms of unfair competition. If they are unfair to the insured the unfairness lies at the heart of a bad faith cause of action.
The unfair conduct may also qualify as fraudulent business practices. Under the UCL, it is necessary only to show that the plaintiff was likely to be deceived, and suffered economic injury as a result of the deception.
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Zhang alleged a litany of bad faith practices by California Capital, including 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. These allegations are sufficient to support a claim of unlawful business practices.
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Private UIPA actions are absolutely barred; a litigant may not rely on the proscriptions of section However, when insurers engage in conduct that violates both the UIPA and obligations imposed by other statutes or the common law, a UCL action may lie. Moradi-Shalal does not preclude first party UCL actions based on grounds independent from section Here, plaintiff alleges causes of action for false advertising and insurance bad faith, both of which provide grounds for a UCL claim independent from the UIPA. UCL actions by private parties are equitable proceedings, with limited remedies.
They are thus quite distinct from the claims for damages with which Moradi-Shalal was concerned. Of course, since a CGL is a third party liability policy one can only wonder how Ms. Zhang had a right to recover for damage to her real property, a coverage not provided by the CGL. Aetna Ins.
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The Supreme Court expanded the right of insured people to sue their insurers when they are unhappy with the results of a claim presentation. This case will provide, by judicious pleading, every person who claims that the insurer violated one of the categories of the UIPA that were barred by Moradi Shalal may simply allege a violation of the UCL. By alleging false advertising Ms.
Whether she can prove the UCL was violated or that she was damaged remains to be seen after the trial. Like Gruenberg , also decided on a demurrer, this decision will be misread to allow UCL actions if alleged and defendants will be required to defeat the allegations at trial or summary judgment. I am afraid this decision will have the same effect on litigation as did the decision in Royal Globe. Of course, since she purchased a CGL policy, a third party liability policy, I cannot conceive how Ms.
Zhang had any right to recover for damage to her property under a CGL which only insures for damage she may do to others. Barry Zalma, Esq. He now limits his practice to service as an insurance consultant and expert witness 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.
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He founded Zalma Insurance Consultants in and serves as its only consultant. Specialty Technical Publishers recently published Mr. Enter your email address to subscribe to this blog and receive notifications of new posts by email. Email Address. Insurance is a contract between a person seeking insurance and an insurer.
It is obtained by making contact with the insurer as a prospective insured seeking insurance.
The homeowners policy is a specialized policy of insurance that protects the homeowner from certain risks of loss to the real and personal property at the home, the exposure the insured faces for injury to a household employee, and the exposure the insured faces to liability for bodily injury or property damage caused to third parties. The book explains how to buy a homeowners policy and how to collect on any claim made to the homeowners insurer. Zalma on Insurance. Skip to content.
Share this: Share Print. Like this: Like Loading About Barry Zalma An insurance coverage and claims handling author, consultant and expert witness with more than 48 years of practical and court room experience.
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