Source: http://dutytodefend.com/defaulting-insurer-forfeits-control-of-the-defense/
Timestamp: 2019-04-22 08:32:46+00:00

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A liability insurer that wrongfully fails to defend may be found to be liable for breach of contract and bad faith. Having defaulted, the insurer may not invoke the rate limitation provision of Civil Code § 2860 retroactively. An insurer that has wrongfully abandoned its policyholder has no voice in the conduct of the policyholder’s defense nor in settlement and may not seize control of the defense nor control its cost by belatedly accepting its duty to defend. However, a defaulting insurer which recants its failure to defend may at most mitigate its damages and limit its exposure to bad faith liability.
 See, Civil Code § 2860 – Rate Limitation Is Not Retroactive; See unpublished opinion: City Art vs. Travelers.
 See, How Much Must an Insurer Pay Independent Counsel?
 Chase v. Blue Cross of Calif. (1996) 42 Cal.App.4th 1142, 1149, 1157 (Chase).
 Id. at 1157; Waller v. Truck Ins. Exchange, Inc. (1995) 11 Cal.4th 1, 34 (Waller).
 Waller, supra, 11 Cal.4th at 32.
 Arenson v. National Auto. & Cas. Ins. Co. (1957) 48 Cal.2d 528, 538.
 Intergulf Development LLC v. Superior Court (2010)183 Cal.App.4th 16, 20 (emphasis added); see also, Janopaul K Block Cos., LLC v. Superior Court (2011) 200 Cal.App.4th 1239, 1249.
 Fuller-Austin Insulation Co. v. Highlands Ins. Co. (2006) 135 Cal.App.4th 958, 984 (emphasis added).
 Atmel Corp. v. St. Paul Fire & Marine Ins. Co. (N.D.Cal. 2005) 426 F.Supp.2d 1039, 1047.
 Eigner v. Worthington (1997) 57 Cal.App.4th 188, 196.
 Stalberg v. Western Title Ins. Co. (1991) 230 Cal.App.3d 1223, 1233 (emphasis added, ellipses omitted).
 The Housing Group v. PMA Captial Insurance Co. (2011) 193 Cal.App.4th 1150, 1157.
 Hinton v. Beck (2009) 176 Cal.App.4th 1378, 1384 (emphasis added).
 Sentex Systems, Inc. v. Hartford Accident & Indemnity Co. (1995, C.D.Cal.) 882 F.Supp. 930, 946.

References: § 2860
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