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The Ninth Circuit Gets It Right: No Coverage No Bad Faith



I Jensen Shirley; Karen Shirley v. Allstate Insurance Company No. 19-56066, United States Court of Appeals for The Ninth Circuit (October 9, 2020), The Ninth Circuit was asked to find coverage and prove that they were entitled to damages in bad faith. Jensen and Karen Shirley (together "Shirleys") appealed the district court's summary judgment in favor of Allstate Insurance Co. ("Allstate") on their claim to California state law for breach of contract and insurance fraud.

THE BURDEN OF A FORSURED

Under California law, Shirleys, like all first insureds, bears the first burden of breach of contract to prove that an event is a claim under the basic coverage of the insurance. Allstate's policy insures Shirleys against "physical loss of property", defined as "physical damage to… Material property." The parties agree that fire pollution constitutes physical damage under the policy.

However, Shirleys failed to prove that ash or soot After Shirleys filed his claim with the Allstate, four inspectors from three companies visited Shirley's home and took samples of suspected ash or soot, none of which inspected any evidence of fire contamination, including soot and ash. pollution, Shirleys relies on subjective reports of a smoke odor in its home, but the agreement explicitly excludes coverage based on "vapors" or "vapors." arguments as to whether the damage to their landscaping falls within the scope of their insurance cover or whether they submitted an tt claims to Allstate for such alleged damages. Shirleys has therefore confiscated this question because issues raised in a summary that are not supported by arguments are considered abandoned. any insurance contract under California law. In order to fulfill this implied union, an insurance company must take at least as much into account the interests of the insured as it gives to its own interests and cannot unreasonably and in bad faith withhold payment of its insured's claims. In order to obtain criminal damages for breach of an implied union, the plaintiff must also prove that the defendant acted with the intended intent to harm the plaintiff.

Allstate withheld benefits and did not break its agreement with Shirley. Since no benefits are due, Allstate cannot be held responsible for acting in bad faith when it refuses to pay Shirley.

Without a breach of the insurance contract, there can be no breach of the implied good faith and fair trade agreement. Also, because the Shirleys did not prove that the Allstate acted in bad faith – let alone with intent to harm – they are not entitled to punitive damages. The district court properly granted a summary judgment on these allegations.

Since there was no evidence of physical damage to the property, the risk of loss of which was insured by Allstate, there could be no obligation or ability to pay a claim since it is impossible to set a monetary value without damage. Failure to prove a loss defeated Shirley's breach of contract and allegations of unbelievable faith. in terms of insurance coverage, handling of insurance claims, fraud and insurance fraud almost equally for insurers and policyholders. He also acts as an arbitrator or mediator for insurance-related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims lawyer and more than 52 years in the insurance business. He is available at http://www.zalma.com and zalma@zalma.com.

Mr. Zalma is the first recipient of the first annual Claims Magazine / ACE Legend Award.

For the past 52 years, Barry Zalma has devoted his life to insurance, insurance claims and the need to defeat insurance fraud. He has created the following library of books and other materials to enable insurers and their claims staff to become professional in insurance claims.

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