04/17/2025
We are proud to announce an excess policy limit recovery against Fred Loya Insurance.
In the practice of personal injury law, this is extremely rare. This is called extracontractual liability. It means the insurance company is forced to pay more than the policy limits of the contract (with their insured).
Here’s an overview:
1. An insurance policy is a contract. The automobile insurer agrees to pay out (indemnify) their insured for covered claims made against them and defend them. This payout has limits—the insurer only agrees to pay up to a certain amount.
2. Every contract in California law includes an implied promise called the covenant of good faith and fair dealing. It means the insurer can’t do anything to harm the insured’s rights to the contract’s benefits. For insurance, this includes not unreasonably refusing a reasonable settlement demand within policy limits.
3. The insurer’s duty kicks in when an attorney, for the injured party:
(a) makes a clear demand to settle all claims against the insured for the policy limits,
(b) with definite terms,
(c) giving the insurer enough time to investigate,
(d) where the insured’s liability is probable,
(e) and based on the claimant’s injuries and the insured’s liability, a judgment is likely to exceed the policy limits.
When these conditions are met, and the insurer unreasonably refuses the demand, they can be liable for the full judgment—even beyond the policy limits.
In our case, Fred Loya Insurance rejected multiple reasonable settlement demands to settle everything within the policy limits. The case proceeded to litigation, where we fought aggressively. Fred Loya has now recognized its errors and agreed to pay damages exceeding the policy limits. These claims will be part of the public record, pursuant to three separate petitions to approve minors’ compromises.
This victory shows our commitment to holding insurers accountable and fighting for our clients’ justice.
