2 Summary of California Law (10th), Insurance

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<d1.o n="I. ">INTRODUCTION

<d2.o n="A. ">Generally.

<d3.o n="1. " sec="1] ">In General.

<d3.o n="2. " sec="2] ">Commentary and Practice Works.

<d3.o n="3. " sec="3] ">Classes of Insurance.

<d3.o n="4. " sec="4] ">Insurer''&apos;s Rights of Subrogation, Contribution, and Indemnity.

<d2.o n="B. ">Regulation of Insurance.

<d3.o n="1. " sec="5] ">Power To Regulate.

<d3.o n="2. " sec="6] ">Governing Law.

<d3.o n="3. " sec="7] ">Department of Insurance and Insurance Commissioner.

<d3.o n="4. " sec="8] ">Policies Governed by Insurance Code.

<d3.o n="5. ">Rate Control.

<d4.o n="(a) " sec="9] ">Proposition 103.

<d4.o n="(b) " sec="10] ">Ratemaking Process.

<d3.o n="6. ">Insolvent Insurers.

<d4.o n="(a) " sec="11] ">Conservatorship and Liquidation.

<d4.o n="(b) ">Insurance Guarantee Associations.

<d5.o n="(1) " sec="12] ">In General.

<d5.o n="(2) " sec="13] ">Liability for Subrogation Claims.

<d3.o n="7. ">Automobile Liability Insurance.

<d4.o n="(a) " sec="14] ">Financial Responsibility Law.

<d4.o n="(b) " sec="15] ">Assigned Risk Law.

<d4.o n="(c) " sec="16] ">Low-Cost Insurance.

<d2.o n="C. ">Insurance Agents and Brokers.

<d3.o n="1. " sec="17] ">In General.

<d3.o n="2. " sec="18] ">Licensing and Regulation.

<d3.o n="3. " sec="19] ">Compensation and Other Rights.

<d3.o n="4. " sec="20] ">Duties and Liabilities.

<d2.o n="D. ">Liability for Failure To Insure.

<d3.o n="1. " sec="21] ">In General.

<d3.o n="2. " sec="22] ">Failure of Insurer To Act on Application.

<d3.o n="3. " sec="23] ">Third Party Engaging To Procure Insurance.

<d3.o n="4. " sec="24] ">Transferor of Insured Property.

<d2.o n="E. ">Conflict of Laws.

<d3.o n="1. " sec="25] ">In General.

<d3.o n="2. " sec="26] ">Life Insurance.

<d3.o n="3. " sec="27] ">Fire, Surety, and Casualty Insurance.

<d1.o n="II. ">FORMATION AND EFFECT OF INSURANCE CONTRACT

<d2.o n="A. ">Formation and Validity.

<d3.o n="1. ">General Principles.

<d4.o n="(a) " sec="28] ">Requisites and Elements.

<d4.o n="(b) " sec="29] ">Written Contracts: Policies.

<d4.o n="(c) " sec="30] ">Oral Contracts.

<d4.o n="(d) " sec="31] ">Parties to Contract.

<d4.o n="(e) " sec="32] ">Statutory Requirements for Legibility.

<d4.o n="(f) " sec="33] ">Foreign Language Policies.

<d3.o n="2. " sec="34] ">Application by Insured.

<d3.o n="3. ">Acceptance or Rejection by Insurer.

<d4.o n="(a) " sec="35] ">In General.

<d4.o n="(b) " sec="36] ">Insurer''&apos;s Right of Refusal.

<d3.o n="4. ">Interim Contracts: Binders.

<d4.o n="(a) " sec="37] ">In General.

<d4.o n="(b) " sec="38] ">Statutory Regulation.

<d4.o n="(c) " sec="39] ">Life Insurance Applications.

<d4.o n="(d) " sec="40] ">Return of Premium as Precondition to Rejection of Application.

<d4.o n="(e) " sec="41] ">Effect of Ambiguous Terms.

<d4.o n="(f) " sec="42] ">Where Insurer Is Not Designated.

<d4.o n="(g) " sec="43] ">Estoppel To Deny Coverage.

<d3.o n="5. " sec="44] ">Execution of Policy.

<d3.o n="6. ">Delivery of Policy.

<d4.o n="(a) " sec="45] ">In General.

<d4.o n="(b) " sec="46] ">Constructive Delivery.

<d3.o n="7. " sec="47] ">Validity.

<d2.o n="B. ">Construction.

<d3.o n="1. ">Generally.

<d4.o n="(a) " sec="48] ">Governing Rules and Principles.

<d4.o n="(b) ">Constituent Parts of Contract.

<d5.o n="(1) " sec="49] ">In General.

<d5.o n="(2) " sec="50] ">Particular Types of Policies.

<d4.o n="(c) " sec="51] ">Policy as Adhesion Contract.

<d4.o n="(d) " sec="52] ">Construction of Policy in Entirety.

<d4.o n="(e) " sec="53] ">Reference to Drafting History, Interpretive Materials, and Advertising.

<d4.o n="(f) " sec="54] ">Effect of Judicial Enlargement of Liability Covered.

<d3.o n="2. ">Unambiguous Provisions: Reference to Plain Meaning.

<d4.o n="(a) " sec="55] ">In General.

<d4.o n="(b) " sec="56] ">Lay Interpretation Governs.

<d4.o n="(c) " sec="57] ">Construction in Context.

<d4.o n="(d) " sec="58] ">Effect of Public Policy.

<d4.o n="(e) " sec="59] ">Illustrations.

<d3.o n="3. ">Ambiguous Provisions: Reasonable Expectations of Insured.

<d4.o n="(a) " sec="60] ">In General.

<d4.o n="(b) " sec="61] ">Relevant Factors.

<d3.o n="4. ">Ambiguous Provisions: Construction Against Insurer.

<d4.o n="(a) " sec="62] ">General Rule Favoring Insured.

<d4.o n="(b) " sec="63] ">Limitations on Rule.

<d4.o n="(c) ">Exclusionary Clauses: Terms Must Be Conspicuous, Plain, and Clear.

<d5.o n="(1) " sec="64] ">In General.

<d5.o n="(2) " sec="65] ">Illustrations of Conspicuous, Plain, and Clear Clauses.

<d2.o n="C. ">Performance and Breach.

<d3.o n="1. ">Conditions Precedent.

<d4.o n="(a) " sec="66] ">In General.

<d4.o n="(b) " sec="67] ">Payment of Premiums.

<d3.o n="2. " sec="68] ">Conditions Subsequent.

<d3.o n="3. ">Right to Proceeds.

<d4.o n="(a) " sec="69] ">In General.

<d4.o n="(b) " sec="70] ">Third-Party Beneficiaries.

<d4.o n="(c) " sec="71] ">Recovery by Insurer of Proceeds Paid Under Mistake.

<d4.o n="(d) " sec="72] ">Change of Beneficiaries or Beneficial Rights.

<d3.o n="4. " sec="73] ">Breach of Contract.

<d2.o n="D. " sec="74] ">Transfer.

<d1.o n="III. ">INSURABLE INTEREST

<d2.o n="A. " sec="75] ">In General.

<d2.o n="B. " sec="76] ">Property Insurance.

<d2.o n="C. " sec="77] ">Automobile Insurance.

<d2.o n="D. ">Life and Disability Insurance.

<d3.o n="1. " sec="78] ">In General.

<d3.o n="2. " sec="79] ">Insurable Interest of Employers, Benefit Plan Trustees, and Charities.

<d3.o n="3. " sec="80] ">Insurable Interest of Creditors.

<d1.o n="IV. ">COVERAGE OF POLICIES GENERALLY

<d2.o n="A. ">Basic Principles.

<d3.o n="1. " sec="81] ">In General.

<d3.o n="2. " sec="82] ">Burden of Proof.

<d3.o n="3. ">Types of Coverage.

<d4.o n="(a) " sec="83] ">First-Party and Third-Party Coverage.

<d4.o n="(b) ">Primary and Secondary Coverage.

<d5.o n="(1) " sec="84] ">In General.

<d5.o n="(2) " sec="85] ">"Other Insurance" Clauses.

<d4.o n="(c) " sec="86] ">Individual and Group Coverage.

<d4.o n="(d) " sec="87] ">Partnership Insurance.

<d4.o n="(e) " sec="88] ">Reinsurance.

<d3.o n="4. ">Definition and Scope of Terms.

<d4.o n="(a) " sec="89] ">In General.

<d4.o n="(b) " sec="90] ">"&ldquo;Accident."&rdquo;

<d4.o n="(c) " sec="91] ">"&ldquo;Advertising Injury."&rdquo;

<d4.o n="(d) " sec="92] ">"&ldquo;Bodily Injury."&rdquo;

<d4.o n="(e) " sec="93] ">"&ldquo;Damages."&rdquo;

<d4.o n="(f) " sec="94] ">"&ldquo;Family,"&rdquo; "&ldquo;Household,"&rdquo; or "&ldquo;Residence."&rdquo;

<d4.o n="(g) " sec="95] ">"&ldquo;Intentional Act."&rdquo;

<d4.o n="(h) " sec="96] ">"&ldquo;Legally Obligated To Pay."&rdquo;

<d4.o n="(i) " sec="97] ">"&ldquo;Pollution."&rdquo;

<d4.o n="(j) " sec="98] ">"&ldquo;Property Damage."&rdquo;

<d4.o n="(k) " sec="99] ">"&ldquo;Suit."&rdquo;

<d2.o n="B. ">Prohibited Indemnifications.

<d3.o n="1. ">Wilful Acts of Insured.

<d4.o n="(a) " sec="100] ">In General.

<d4.o n="(b) ">What Constitutes Wilful Act.

<d5.o n="(1) " sec="101] ">Conduct Intended To Harm or Inherently Harmful.

<d5.o n="(2) " sec="102] ">Effect of Insanity.

<d4.o n="(c) ">Particular Acts.

<d5.o n="(1) " sec="103] ">Wrongful Termination.

<d5.o n="(2) " sec="104] ">Malicious Prosecution.

<d5.o n="(3) " sec="105] ">Child Molestation.

<d5.o n="(4) " sec="106] ">Sex Torts Involving Battery or Fraud.

<d5.o n="(5) " sec="107] ">Sexual Harassment.

<d5.o n="(6) " sec="108] ">Other Examples.

<d4.o n="(d) ">Distinctions.

<d5.o n="(1) " sec="109] ">Negligent Act.

<d5.o n="(2) " sec="110] ">Act Not Committed by Insured.

<d5.o n="(3) " sec="111] ">Liability Under Surety Bond.

<d5.o n="(4) " sec="112] ">Independent Coverage.

<d3.o n="2. " sec="113] ">Punitive Damages.

<d2.o n="C. ">First-Party Insurance.

<d3.o n="1. " sec="114] ">In General.

<d3.o n="2. " sec="115] ">Trigger of Coverage.

<d3.o n="3. ">Causation of Loss.

<d4.o n="(a) " sec="116] ">In General: Efficient Proximate Cause Standard.

<d4.o n="(b) " sec="117] ">Distinction: Separate Characterization of Excluded Cause.

<d3.o n="4. ">Life Insurance.

<d4.o n="(a) " sec="118] ">In General.

<d4.o n="(b) " sec="119] ">Accidental Death Provisions.

<d4.o n="(c) " sec="120] ">Condition of Insured''&apos;s Good Health.

<d4.o n="(d) " sec="121] ">Exclusion for Suicide.

<d3.o n="5. ">Health and Disability Insurance.

<d4.o n="(a) " sec="122] ">In General.

<d4.o n="(b) " sec="123] ">Total Disability.

<d4.o n="(c) " sec="124] ">Inception of Covered Condition.

<d4.o n="(d) " sec="125] ">Effect of ERISA.

<d4.o n="(e) ">HMO Plans.

<d5.o n="(1) " sec="126] ">In General.

<d5.o n="(2) " sec="127] ">Contracts Interfering With Physician-Patient Communication.

<d5.o n="(3) " sec="128] ">Contracts Offering Incentives To Deny Medical Services.

<d5.o n="(4) " sec="129] ">Contracts Restricting Advertising.

<d5.o n="(5) " sec="130] ">Health Care Provider’'&apos;s Bill of Rights.

<d3.o n="6. ">Property Insurance.

<d4.o n="(a) " sec="131] ">In General.

<d4.o n="(b) " sec="132] ">Exclusions.

<d3.o n="7. ">Surety or Fidelity Insurance.

<d4.o n="(a) " sec="133] ">In General.

<d4.o n="(b) " sec="134] ">Loss Occurring Over Multiple Policy Periods.

<d2.o n="D. ">Third-Party (Liability) Insurance.

<d3.o n="1. " sec="135] ">In General.

<d3.o n="2. " sec="136] ">No-Fault Insurance Proposals.

<d3.o n="3. ">Trigger of Coverage.

<d4.o n="(a) " sec="137] ">In General.

<d4.o n="(b) ">"&ldquo;Occurrence"&rdquo; Policies.

<d5.o n="(1) " sec="138] ">In General.

<d5.o n="(2) " sec="139] ">Continuing or Progressive Injuries.

<d4.o n="(c) ">"&ldquo;Claims Made"&rdquo; Policies.

<d5.o n="(1) " sec="140] ">In General.

<d5.o n="(2) " sec="141] ">Related Claims.

<d5.o n="(3) " sec="142] ">Awareness Provisions.

<d4.o n="(d) " sec="143] ">Variations of Basic Policy Types.

<d3.o n="4. " sec="144] ">Causation of Loss: Concurrent Proximate Cause Standard.

<d3.o n="5. ">Exclusions.

<d4.o n="(a) " sec="145] ">In General.

<d4.o n="(b) ">"&ldquo;Expected or Intended"&rdquo; Harm.

<d5.o n="(1) " sec="146] ">In General.

<d5.o n="(2) " sec="147] ">Subjective Test.

<d3.o n="6. " sec="148] ">Commercial General Liability (CGL) Insurance.

<d3.o n="7. ">Homeowners Liability Insurance.

<d4.o n="(a) " sec="149] ">In General.

<d4.o n="(b) ">Exclusions.

<d5.o n="(1) " sec="150] ">Business Pursuits.

<d5.o n="(2) " sec="151] ">Injuries to Household Members and Residents.

<d5.o n="(3) " sec="152] ">Automobile-Related Incidents.

<d3.o n="8. ">Professional Liability Insurance.

<d4.o n="(a) " sec="153] ">In General.

<d4.o n="(b) " sec="154] ">Legal Malpractice Insurance.

<d4.o n="(c) " sec="155] ">Medical Malpractice Insurance.

<d3.o n="9. " sec="156] ">Directors and Officers Liability Insurance.

<d3.o n="10. . " sec="157] ">Products Liability Insurance.

<d3.o n="11. " sec="158] ">Employers''&apos; Liability Insurance.

<d1.o n="V. ">COVERAGE OF AUTOMOBILE POLICIES

<d2.o n="A. ">Generally.

<d3.o n="1. " sec="159] ">In General.

<d3.o n="2. " sec="160] ">Property Loss Coverage.

<d3.o n="3. " sec="161] ">Medical Payments Coverage.

<d2.o n="B. ">Liability Coverage.

<d3.o n="1. ">In General.

<d4.o n="(a) " sec="162] ">Nature of Coverage.

<d4.o n="(b) " sec="163] ">Types of Policies.

<d4.o n="(c) " sec="164] ">Persons and Entities Insured.

<d4.o n="(d) " sec="165] ">Vehicles Insured.

<d4.o n="(e) " sec="166] ">Activities Covered.

<d4.o n="(f) " sec="167] ">Territorial Limits.

<d4.o n="(g) " sec="168] ">Monetary Limits.

<d3.o n="2. ">Permissive Use.

<d4.o n="(a) " sec="169] ">In General.

<d4.o n="(b) " sec="170] ">Coverage Required.

<d4.o n="(c) ">Limitations and Exceptions to Requirement.

<d5.o n="(1) " sec="171] ">In General.

<d5.o n="(2) " sec="172] ">Exception of Designated Users.

<d4.o n="(d) " sec="173] ">Scope of Insured''&apos;s Permission.

<d3.o n="3. ">Exclusions.

<d4.o n="(a) " sec="174] ">In General.

<d4.o n="(b) " sec="175] ">Statutory List.

<d4.o n="(c) " sec="176] ">Injuries to Insureds.

<d4.o n="(d) " sec="177] ">Designated Vehicles or Classes of Vehicles.

<d3.o n="4. ">Effect of Other Insurance.

<d4.o n="(a) " sec="178] ">In General.

<d4.o n="(b) " sec="179] ">Statutory Presumptions.

<d2.o n="C. ">Uninsured Motorist Coverage.

<d3.o n="1. " sec="180] ">Nature and Purpose.

<d3.o n="2. ">Requirement and Amount of Coverage.

<d4.o n="(a) " sec="181] ">Personal Injury Coverage: Uninsured Motorists.

<d4.o n="(b) ">Personal Injury Coverage: Underinsured Motorists.

<d5.o n="(1) " sec="182] ">In General.

<d5.o n="(2) " sec="183] ">Exhaustion of Other Insurance.

<d5.o n="(3) " sec="184] ">Reimbursement or Credit to Insurer.

<d5.o n="(4) " sec="185] ">Conflicting Uninsured Motorist Provisions Are Superseded.

<d4.o n="(c) " sec="186] ">Collision Coverage.

<d4.o n="(d) " sec="187] ">Effect of Other Compensation.

<d4.o n="(e) " sec="188] ">Policy Limits.

<d4.o n="(f) " sec="189] ">Multiple Policies.

<d3.o n="3. ">Scope and Conditions of Coverage.

<d4.o n="(a) " sec="190] ">Persons Insured.

<d4.o n="(b) " sec="191] ">Vehicles Involved.

<d4.o n="(c) ">Statutory Exclusions.

<d5.o n="(1) " sec="192] ">In General.

<d5.o n="(2) " sec="193] ">Settlement or Judgment Without Insurer''&apos;s Consent.

<d5.o n="(3) " sec="194] ">Occupied Vehicle Owned but Not Covered by Policy.

<d5.o n="(4) " sec="195] ">Occupied Vehicle Covered by Similar Insurance.

<d4.o n="(d) " sec="196] ">Policy Exclusions.

<d4.o n="(e) " sec="197] ">When Vehicle Is Uninsured.

<d4.o n="(f) ">Claims Involving Unknown Owner or Operator.

<d5.o n="(1) " sec="198] ">Physical Contact.

<d5.o n="(2) " sec="199] ">Notification of Authorities and Insurer.

<d3.o n="4. ">Waiver of Coverage.

<d4.o n="(a) " sec="200] ">Personal Injury Coverage.

<d4.o n="(b) " sec="201] ">Collision Coverage.

<d4.o n="(c) " sec="202] ">Multiple Vehicles.

<d4.o n="(d) " sec="203] ">Illustrations: Effective Waivers.

<d4.o n="(e) " sec="204] ">Illustrations: Ineffective Waivers.

<d3.o n="5. ">Procedure.

<d4.o n="(a) ">Statute of Limitations.

<d5.o n="(1) " sec="205] ">In General.

<d5.o n="(2) " sec="206] ">Underinsured Motorist Claims.

<d5.o n="(3) " sec="207] ">Action To Compel Arbitration.

<d4.o n="(b) ">Arbitration.

<d5.o n="(1) " sec="208] ">Requirement.

<d5.o n="(2) " sec="209] ">Issues Subject to Arbitration.

<d5.o n="(3) " sec="210] ">Notice and Hearing.

<d5.o n="(4) " sec="211] ">Joinder and Consolidation.

<d5.o n="(5) " sec="212] ">Stay When Workers''&apos; Compensation Claim Is Filed.

<d5.o n="(6) " sec="213] ">Conclusion of Arbitration.

<d5.o n="(7) " sec="214] ">Award and Review.

<d4.o n="(c) " sec="215] ">Subrogation of Insurer.

<d1.o n="VI. ">REFORMATION AND TERMINATION OF INSURANCE CONTRACT

<d2.o n="A. ">Reformation.

<d3.o n="1. " sec="216] ">In General.

<d3.o n="2. " sec="217] ">Mistake as Ground.

<d3.o n="3. " sec="218] ">Effect of Accepting or Failing To Read Policy.

<d2.o n="B. ">Cancellation.

<d3.o n="1. " sec="219] ">In General.

<d3.o n="2. " sec="220] ">Cancellation by Lender Financing Premiums.

<d3.o n="3. " sec="221] ">Cancellation in Bad Faith.

<d3.o n="4. " sec="222] ">Notice of Cancellation.

<d2.o n="C. " sec="223] ">Nonrenewal.

<d2.o n="D. ">Rescission.

<d3.o n="1. " sec="224] ">Right To Rescind.

<d3.o n="2. " sec="225] ">General Limitations.

<d3.o n="3. ">Incontestability Clauses.

<d4.o n="(a) " sec="226] ">In General.

<d4.o n="(b) " sec="227] ">What Constitutes Contest.

<d4.o n="(c) " sec="228] ">Life Insurance.

<d4.o n="(d) " sec="229] ">Disability Insurance.

<d3.o n="4. " sec="230] ">Exercise of Right.

<d3.o n="5. " sec="231] ">Misrepresentation or Concealment Affecting Amount of Premium.

<d3.o n="6. " sec="232] ">Misrepresentation or Concealment of Change in Medical Condition.

<d2.o n="E. ">Automobile Insurance Policies.

<d3.o n="1. " sec="233] ">Grounds for Termination.

<d3.o n="2. " sec="234] ">Procedure for Cancellation.

<d3.o n="3. " sec="235] ">Procedure for Nonrenewal.

<d3.o n="4. " sec="236] ">Effect of Permitting Policy To Expire.

<d3.o n="5. " sec="237] ">Required and Prohibited Policy Provisions.

<d1.o n="VII. ">RIGHTS AND OBLIGATIONS AFTER OCCURRENCE OF INSURED EVENT

<d2.o n="A. " sec="238] ">Indemnification of Insured.

<d2.o n="B. ">Bad Faith Liability.

<d3.o n="1. ">Implied Covenant of Good Faith and Fair Dealing.

<d4.o n="(a) " sec="239] ">Nature of Covenant.

<d4.o n="(b) ">Breach of Covenant by Insurer.

<d5.o n="(1) " sec="240] ">In General.

<d5.o n="(2) " sec="241] ">Tort and Contract Remedies.

<d5.o n="(3) " sec="242] ">Punitive Damages.

<d4.o n="(c) " sec="243] ">Breach of Covenant by Insured: Only Contract Damages.

<d4.o n="(d) ">Actionable Conduct.

<d5.o n="(1) " sec="244] ">In General.

<d5.o n="(2) " sec="245] ">Investigation or Evaluation of Claims.

<d5.o n="(3) " sec="246] ">Conduct of Litigation.

<d5.o n="(4) " sec="247] ">Denial of Benefits or Delay in Payment.

<d4.o n="(e) " sec="248] ">Breach of Insurance Contract Is Required.

<d4.o n="(f) " sec="249] ">Commentary and Practice Works.

<d3.o n="2. ">Alternative Theories of Liability.

<d4.o n="(a) " sec="250] ">Breach of Express Terms of Contract.

<d4.o n="(b) " sec="251] ">Traditional Tort Actions.

<d4.o n="(c) ">Unfair Insurance Practices Act.

<d5.o n="(1) " sec="252] ">Nature and Scope of Act.

<d5.o n="(2) ">No Private Statutory Action.

<d6.o n="(aa) " sec="253] ">Royal Globe Doctrine.

<d6.o n="(bb) " sec="254] ">Abrogation of Royal Globe in Moradi-Shalal.

<d6.o n="(cc) " sec="255] ">Subsequent Developments.

<d5.o n="(3) " sec="256] ">Estoppel Based on Violation of Act.

<d2.o n="C. ">Insurer''&apos;s Duty To Settle.

<d3.o n="1. ">Bad Faith Refusal To Settle.

<d4.o n="(a) ">In General.

<d5.o n="(1) " sec="257] ">Nature of Duty.

<d5.o n="(2) " sec="258] ">Bad Faith Test of Breach.

<d5.o n="(3) " sec="259] ">Excess Judgment Required.

<d5.o n="(4) " sec="260] ">Discovery of Policy Limits.

<d5.o n="(5) " sec="261] ">Assignment of Cause of Action Against Insurer.

<d5.o n="(6) " sec="262] ">Rights of Excess Insurer.

<d4.o n="(b) ">Illustrations.

<d5.o n="(1) " sec="263] ">Duty Not Breached.

<d5.o n="(2) " sec="264] ">Breach by Insurer That Defends.

<d5.o n="(3) " sec="265] ">Breach by Insurer That Does Not Defend.

<d4.o n="(c) " sec="266] ">Effect of Seeking Declaratory Relief.

<d3.o n="2. ">Bad Faith Acceptance of Settlement.

<d4.o n="(a) " sec="267] ">In General.

<d4.o n="(b) " sec="268] ">Coercing Insured''&apos;s Contribution to Settlement.

<d3.o n="3. " sec="269] ">Reimbursement of Insurer for Settlement of Uncovered Claims.

<d2.o n="D. ">Insurer''&apos;s Duty To Defend.

<d3.o n="1. " sec="270] ">Insurer''&apos;s Obligation and Right of Control.

<d3.o n="2. ">Scope of Duty.

<d4.o n="(a) " sec="271] ">Potential for Coverage Test.

<d4.o n="(b) " sec="272] ">Duty Is Broader Than Duty To Indemnify.

<d4.o n="(c) ">Manner of Determining Duty.

<d5.o n="(1) " sec="273] ">Declaratory Relief.

<d5.o n="(2) " sec="274] ">Use of Evidence Extrinsic to Complaint.

<d4.o n="(d) " sec="275] ">Inception and Duration of Duty.

<d3.o n="3. ">Duty in Particular Actions.

<d4.o n="(a) " sec="276] ">Action Requiring Resolution of Legal Question.

<d4.o n="(b) " sec="277] ">Action Based on Emotional or Physical Distress From Uncovered Loss.

<d4.o n="(c) " sec="278] ">Criminal Action.

<d4.o n="(d) " sec="279] ">Wrongful Termination Action.

<d4.o n="(e) " sec="280] ">Action Based on Sexual Misconduct.

<d4.o n="(f) " sec="281] ">Action Under Workers''&apos; Compensation Policy.

<d4.o n="(g) ">Other Circumstances.

<d5.o n="(1) " sec="282] ">Duty To Defend.

<d5.o n="(2) " sec="283] ">No Duty To Defend.

<d3.o n="4. " sec="284] ">Insurer''&apos;s Reservation of Rights.

<d3.o n="5. ">Defense After Exhaustion of Policy Limits.

<d4.o n="(a) " sec="285] ">In General.

<d4.o n="(b) " sec="286] ">Effect of Several Primary Policies.

<d3.o n="6. ">Independent Counsel Where Conflict of Interest.

<d4.o n="(a) " sec="287] ">In General.

<d4.o n="(b) " sec="288] ">Existence of Conflict of Interest.

<d4.o n="(c) " sec="289] ">Time of Appointment.

<d4.o n="(d) " sec="290] ">Selection and Payment.

<d4.o n="(e) " sec="291] ">Rights and Duties in Course of Litigation.

<d3.o n="7. ">Defense of Action in Entirety.

<d4.o n="(a) " sec="292] ">Duty of Insurer.

<d4.o n="(b) " sec="293] ">Reimbursement for Defense of Uncovered Claims.

<d3.o n="7A. " sec="[§293A] ">(New) Reimbursement on Determination That Insurer Had No Duty To Defend.

<d3.o n="8. " sec="294] ">Courtesy Defense of Uninsured Defendant.

<d3.o n="9. ">Manner of Conducting Defense.

<d4.o n="(a) " sec="295] ">Duty To Exercise Due Care and Good Faith.

<d4.o n="(b) " sec="296] ">Funding of Defense.

<d3.o n="10. . ">Effect of Failure or Refusal To Defend.

<d4.o n="(a) " sec="297] ">Action Defended by Insured.

<d4.o n="(b) " sec="298] ">Insured Unable To Defend.

<d4.o n="(c) " sec="299] ">Recovery of Tort Damages.

<d3.o n="11. " sec="300] ">Assignment of Cause of Action Against Insurer.

<d2.o n="E. ">Insurer''&apos;s Liability to Injured Person.

<d3.o n="1. " sec="301] ">Liability on Judgment Against Insured.

<d3.o n="2. ">Action by Injured Person Against Insurer Directly.

<d4.o n="(a) " sec="302] ">General Rule: No Action Without Judgment.

<d4.o n="(b) " sec="303] ">Exception: Suit Under Special Legislation.

<d4.o n="(c) " sec="304] ">Exception: Suit as Third-Party Beneficiary Under Traditional Contract Principles.

<d3.o n="3. " sec="305] ">Effect of Stipulated Judgment.

<d3.o n="4. ">Bad Faith Liability.

<d4.o n="(a) " sec="306] ">In General.

<d4.o n="(b) " sec="307] ">No Liability for Failure To Settle.

<d4.o n="(c) " sec="308] ">Liability for Withholding Amounts Owed on Judgment.

<d2.o n="F. ">Defenses of Insurer.

<d3.o n="1. " sec="309] ">In General.

<d3.o n="2. " sec="310] ">Defenses Against Insured Are Available Against Injured Party.

<d3.o n="3. " sec="311] ">Defense of Fraud.

<d3.o n="4. ">Defense of Noncooperation.

<d4.o n="(a) " sec="312] ">Nature of Cooperation Clause.

<d4.o n="(b) " sec="313] ">Prejudice Required.

<d4.o n="(c) " sec="314] ">Failure To Disclose Information.

<d4.o n="(d) " sec="315] ">Failure To Assist in Trial Preparation.

<d4.o n="(e) " sec="316] ">Absence From Trial.

<d3.o n="5. ">Defense of Violation of Other Policy Conditions.

<d4.o n="(a) " sec="317] ">Notice and Proof of Loss.

<d4.o n="(b) " sec="318] ">Notice of Accident or Claim.

<d4.o n="(c) " sec="319] ">Submission to Examination Under Oath.

<d4.o n="(d) " sec="320] ">Prohibition Against Voluntary Payments.

<d3.o n="6. " sec="321] ">Defense of Federal Preemption Under ERISA.

<d3.o n="7. " sec="322] ">No Defense of Comparative Bad Faith.

<d3.o n="8. " sec="323] ">Effect of Transgressions by Fewer Than All Insureds.

<d3.o n="9. ">Waiver of, or Estoppel To Assert, Defenses.

<d4.o n="(a) " sec="324] ">In General.

<d4.o n="(b) " sec="325] ">Denial of Coverage on Limited Grounds.

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