noting that, “[i]f an insurer could not unilaterally reserve its right to later assert noncoverage of any settled claim, it would have no practical avenue of recourse other than to settle and forgo reimbursement. An insured’s mere objection to a reservation of right would create coverage contrary to the parties’ agreement in the insurance policy and violate basic notions of fairness.”
How later courts described this case
- noting that, “[i]f an insurer could not unilaterally reserve its right to later assert noncoverage of any settled claim, it would have no practical avenue of recourse other than to settle and forgo reimbursement. An insured’s mere objection to a reservation of right would create coverage contrary to the parties’ agreement in the insurance policy and violate basic notions of fairness.”
- observing that the insured’s objection to a reservation of rights “would create coverage contrary to the parties’ agreement in the insurance policy and violate basic notions of fairness”
- holding an insurer may seek reimbursement for settlement of uncovered claims where the insured is aware of the reservation but acquiesces
- indicating that insurer provided notice on June 4 and requested a response by June 10, where the settlement offer was to expire on June 12
Written by the judges who cited it.
The opinion
GEORGE, C. J.
I concur in the result reached by the majority opinion and in much of its analysis, with the understanding that nothing contained therein alters the established standard—not mentioned by the majority—governing an insurer’s evaluation of the reasonableness of a settlement offer in this context. “[I]n determining whether to settle[,] the insurer must give the interests of the insured at least as much consideration as it gives to its own interests . . . .” (Crisci v. Security Ins. Co. (1967) 66 Cal.2d 425, 429 [ 58 Cal.Rptr. 13 , 426 P.2d 173 ]; see also Cates Construction, Inc. v. Talbot Partners (1999) 21 Cal.4th 28, 44 [ 86 Cal.Rptr.2d 855 , 980 P.2d 407 ] [“The assumption of [the duty to defend] obligates the insurer to give at least as much consideration to the welfare of its insured as it gives to its own interests so as not to deprive the insured of the benefits of the insurance policy”].) An insurer assesses whether a settlement offer is reasonable by determining whether accepting the offer is “the most reasonable manner of disposing of the claim . . . .” (Crisci v. Security Ins. Co., supra, 66 Cal.2d at p. 430 .)
Mosk, J., and Werdegar, J., concurred.