CCP 999.1-5 PDF

California Civil Code of Procedure (CCP) Section 999 Insurance Beyond Policy Limits  "An insurer that fails to accept a reasonable settlement offer within policy limits will be held liable in tort for the entire judgment against the insured, even if that amount exceeds the policy li...

California Civil Code of Procedure (CCP) Section 999 Insurance Beyond Policy Limits  "An insurer that fails to accept a reasonable settlement offer within policy limits will be held liable in tort for the entire judgment against the insured, even if that amount exceeds the policy limits. An insurer’s duty to accept a reasonable settlement offer in these circumstances is implied in law to protect the insured from exposure to liability in excess of coverage as a result of the insurer’s gamble—on which only the insured might lose.” (Rappaport Scott v. Underinsurance Exch. of the Auto.Club (2007) 146 Cal.App.4th 831, 836 [53 Cal.Rptr.3d 245], internal citations omitted.)" - Policy Limit Demand Template HEDAYATI v. AAA 67 Cal.App.5th 833 Maryam Hedayati suffered injuries in 2012 from an Auto Club-insured driver running a red light. The driver informed Auto Club of the $25,000 policy limit, lacking assets. As per policy, driver gave up negotiation rights for covered claims, but Auto Club falsely said Hedayati would not sign a release. The Insurance also failed to give a written disclosure of the Insured's policy limits, and ultimately failed to settle the case for policy limits. "Hedayati's November 20 offer specified additional conditions, including that [the demand] had to be accepted in writing within a week" HEDAYATI v. AAA 67 Cal.App.5th 833 The reasonableness of a 7-day demand is a triable issue of fact. The following must be considered: How many files did the adjuster have to deal with? How will mail and time-sensitive demands that may come in during a holiday week be handled? PINTO v. FARMERS 61 Cal.App.5th 676 A reasonable settlement demand must take into account the following: Was the demand within policy limits? Was the demand sent at a time when liability is reasonably clear? ⚬ Is there comparative liability? ⚬ Are there co-defendants? Is the judgment likely to exceed the amount of the demand? Is the demand reasonable in all other respects? ⚬ Was there a reasonable amount of time to respond? ⚬ Was there a reasonable amount of information provided? New* California Civil Code of Procedure (CCP) Rules 999. 1-5 * Since January 1, 2023  CCP §999 “Time-limited demand” means an offer prior to the filing of the complaint or demand for arbitration to settle any cause of action or a claim for personal injury, property damage, bodily injury, or wrongful death made by or on behalf of a claimant to a tortfeasor with a liability insurance policy for purposes of settling the claim against the tortfeasor within the insurer’s limit of liability insurance, which by its terms must be accepted within a specified period of time. "Extracontractual damages" means any amount of damage that exceeds the total available limit of liability insurance for all of a liability insurer's liability insurance policies applicable to a claim for property damage, personal injury, bodily injury, or wrongful death. CCP §999.1 Demand must be in writing Demand must be labeled "Time-Limited Demand" or it must reference CCP §999.1-5 Demand MUST contain the following minimum material terms: ⚬ At least 30 days to accept demand by email, fax or certified mail, 33 days by mail ⚬ Offer to settle all claims within policy limits, including satisfaction of all liens ⚬ Offer a complete release of the Insured from present and future liability ⚬ The date and location of the loss ⚬ The claim number, if known ⚬ A description of all known injuries ⚬ Reasonable proof, which may include, if applicable, medical records or bills, sufficient to support the claim. CCP §999.2 The Demand must be sent to either of the following: ⚬ The email address or physical address designated by the liability insurer, if an address has been provided by the liability insurer to the Department of Insurance and the Department of Insurance has made the address publicly available; or ⚬ The insurance representative assigned to handle the claim, if known To implement this section, the Department of Insurance shall post on its internet website the email address or physical address designated by a liability insurer for receipt of time-limited demands CCP §999.3 The Insurer may accept the demand by providing written acceptance of material terms outlined in §999.1 in their entirety Requests for clarification, additional information, or extension of time, made during the time to accept the demand, shall not in and of itself, be deemed a counteroffer or rejection If the insurer does not accept the demand, it shall: ⚬ Notify the claimant in writing of its decision ⚬ Explain the basis for its decision ⚬ Rejection must be sent prior to expiration of the demand ⚬ Rejection will be relevant in later bad faith lawsuit CCP §999.3 CCP §999.4 A demand that does not substantially comply with section will not be considered a “reasonable offer to settle” in a subsequent bad faith action This section shall not apply to a claimant that is not represented by counsel. CCP §999.5 Applies to claims covered under automobile, motor vehicle, homeowner or commercial premises liability insurance policies for property damage, personal or bodily injury, and wrongful death claims THANK YOU! Any questions?