February 16, 2010
A recent court of appeal decision in Superior Dispatch v. Insurance Co. of New York. addressed estoppel against an insurer. The court held that in an action by an insured against an insurer, the insurer could be estopped from asserting a coverage defense if the insurer did not advise the insured of the coverage defense during the claim, even if the coverage provision is plain, clear, and conspicuous in the policy. A critical part of the decision was the court's finding that the California Insurance Regulations (in particular, section 2695.4) require an insurer to advise an insured of all policy provisions that "may apply to the claim," and that a failure to do so can estop the insurer even if the insured was represented by counsel during the claim.
Although Superior Dispatch involved a contractual period of limitations, its application may not be so limited. By its terms, the case applies to any "policy provisions that may apply to the claim." A petition for rehearing was filed on February 5th.
Cal.App. 2nd Dist. (B204878)