Kransco v. American Empire Surplus Lines Insurance Co. The California Court of Appeal, First Appellate District affirmed a trial court's decision that a policyholder's comparative bad faith and comparative negligence should not be considered and should not reduce the amount of compensatory and punitive damages awarded against an insurance company for the insurance company's bad faith. A jury found that the insurance company breached its duty of good faith and assessed compensatory damages at $14 million. However, the jury also found that the policyholder had breached its duty of good faith and fair dealing and attributed fault for the verdict at 90 percent to the policyholder and 10 percent to the insurance company. The policyholder moved for judgment notwithstanding the verdict. The court found comparative negligence was wholly inapplicable to the case and that the consideration of comparative bad faith should have been limited to whether the policyholder contributed to the insurance company's failure to settle by impairing the insurance company's assessment of the possibility of an excess judgment.

Insurance Companies Have Duty to Defend Sexual Harassment Suit. Duff Supply Co. v. Crum & Forster Insurance Co. The U.S. District Court for the Eastern District of Pennsylvania, applying Pennsylvania law, held that insurance companies that sold a commercial general liability insurance policy and an excess commercial umbrella policy must defend an action brought against the policyholder alleging gender-based discrimination and sexual harassment because the allegations in the complaint fell within the coverage provided for "personal injury."

Farmers Group of Companies May be Sued for Bad Faith. Oliver v. Farmers Insurance Group of Companies. The Oklahoma Supreme Court held that the Farmers Group of Companies may be sued for bad faith handling of a policyholder's claim. The Group of Companies argued that it was not a corporate entity but a collective name for a group of corporations that is not licensed to transact insurance in Oklahoma. The Oklahoma Supreme Court, relying on case law and an affidavit from a former state insurance commissioner, found that the Farmers Group of Companies is a name under which a number of Farmers-related companies insure against risks and that under Oklahoma statutory law the policyholder may properly bring suit against Farmers Insurance Group of Companies.