Perspective
Nov. 25, 2015
Fraud and collusion defenses can be risky
Courts generally summarily dispose of fraud and collusion defense when a neutral trial of fact is in play. By David B. Ezra
Believing there's no potential for coverage, a liability insurer declines a defense request. The claimant offers a covenant not to execute against the policyholder's assets in return for an assignment of bad faith rights. A large judgment is entered against the policyholder and the bad faith suit inevitably follows.
Long ago, Critz v. Farmers Ins. Group, 230 Cal. App. 2d 788, 801-02 (1964), explained that once the ins...
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