New Insurance Law: The Extension Of California's "Genuine Dispute" Doctrine To Disputes Over The Value Of General Damages In UM/UIM Claims Handling

• Jurisdiction: California,United States
• Author: Ms Suzanne Y. Badawi
• Law Firm: Sheppard Mullin Richter & Hampton
• Published date: 21 February 2023

One of the most powerful weapons an insurance company can use to defeat a bad faith claim is the 'genuine dispute' doctrine. Under this doctrine, as long as there was a genuine dispute regarding coverage or the amount owed, the insurer cannot be held liable for having withheld the disputed policy benefits even if it later turned out they were owed. Chateau Chamberay Homeowners Ass'n v. Associated Int'l Ins. Co., 90 Cal.App.4th 335 (2001). Historically, this defense has been applied most commonly in published cases involving disputes over unsettled legal issues or where the insurer's position was supported by a qualified expert. See e.g.,Fraley v. Allstate Ins. Co.,81 Cal.App.4th 1282 (2000); Guebara v. Allstate Ins. Co.,237 F.3d 987 (9th Cir. 2001); Opsal v. USAA, 2 Cal.App.4th 1197 (1991).

Recently, however, a published decision expanded the use of the doctrine to disputes over general damages. In Hovsepyan v. GEICO Gen. Ins. Co., ' F.Supp.3d ', 2022 WL 2873059, at *7 (E.D. Cal. July 21, 2022), the district court noted that the value of a claimant's general damages is 'a matter on which there...