Reasonableness of Denying Insurance Coverage Cases In California
The covenant of good faith and fair dealing implied in every contract assumes peculiar importance in insurance law because it may support the recovery of a tort measure of damages. (Comunale v. Traders & General Ins. Co. (1958) 50 Cal. 2d 654, 658 328 P.2d 198, 68 A.L.R.2d 883).
In general, the standard of good faith and fairness calls for consideration of the reasonableness of the insurer's conduct in denying coverage.
As stated in Brandt v. Superior Court (1985) 37 Cal. 3d 813, 819 210 Cal. Rptr. 211, 693 P.2d 796, " 'An erroneous interpretation of an insurance contract by an insurer does not necessarily make the insurer liable in tort for violating the covenant of good faith and fair dealing; to be liable in tort, the insurer's conduct must also have been unreasonable. . . .".
See also Tomaselli v. Transamerica Ins. Co. (1994) 25 Cal. App. 4th 1269, 1280-1281 31 Cal. Rptr. 2d 433; Opsal v. United Services Auto. Assn. (1991) 2 Cal. App. 4th 1197, 1205 10 Cal. Rptr. 2d 352; California Shoppers, Inc. v. Royal Globe Ins. Co. (1985) 175 Cal. App. 3d 1, 54-55 221 Cal. Rptr. 171).