An insurer’s indemnity obligation is undoubtedly an important promise under every liability policy. However, it is only one of several important obligations owed to an insured. An equally if not more important obligation is the insurer’s duty to provide professional claims handling to ensure an insured is not exposed to an excess judgment.
A California Appellate Court recently reinforced the importance of an insurer’s obligation to perform professional claims adjusting by finding a carrier liable for an excess judgment based on its unreasonable failures in the claims process despite the insurer timely offering its indemnity limits to a claimant.
Simone v. State Farm Mut. Auto. Ins. Co., 2025 WL 3652879 (Cal. App. Dec. 17, 2025)
Background
In April 2015, Elijah Simone was riding his bike home from work when he was struck by a vehicle operated by Bruce Jameson. Simone suffered spinal injuries that rendered him a partial tetraplegic and he spent several months hospitalized before being discharged home on August 2015.
At the time of the wreck, Jameson was insured under an auto policy issued by State Farm. Unfortunately, the State Farm policy provided only $25,000 in liability coverage for the wreck.
State Farm’s Claims Handling
While Simone was still hospitalized, State Farm sent him a letter indicating it was aware that Simone had been in a wreck with Jameson and requested medical bills and records, wage loss documentation and information on how the wreck occurred. Additionally, State Farm informed Simone that any reimbursement of Simone’s expenses would be contingent on him releasing Jameson from any liability. A few months later, State Farm sent Simone another letter stating it would close its file and assume he did not want to pursue a claim if Simone did not respond within 30 days.
Less than a week later, Simone, through his mother, sent State Farm a letter that included his medical records detailing his injuries. In addition, Simone requested:
- a. Confirmation of the amount of insurance Jameson had including a copy of his insurance policy with State Farm; and
- b. Confirmation of whether Jameson had any other insurance coverage and whether Jameson was driving for work.
Simone also requested that State Farm offer the maximum amount of insurance for Mr. Jameson. Simone set their own deadline, informing State Farm that it must respond in writing and within 15 days. If it did so and agreed to pay the maximum insurance, Simone would settle his claims.
After receiving Simone’s letter, State Farm documented the letter as a “demand for policy limits” and the claims representative documented that she was authorized to offer the $25,000 policy limit. State Farm also spoke with Jameson and confirmed he had no other insurance for the wreck.
After speaking with Jameson, State Farm chose to call Simone and left him a voicemail offering $25,000 in settlement. State Farm followed-up this phone call with a letter in which it stated it was offering the $25,000 to settle his claim. However, State Farm did not send Simone a copy of Jameson’s State Farm Policy and did not confirm in writing that Jameson had no other insurance. State Farm does not appear to have offered a justification for failing to provide this information to Simone in writing other than that the State Farm representatives preferred to have phone conversations with unrepresented claimants rather than sending letters.
Underlying Lawsuit
Simone eventually retained counsel and filed suit against Jameson for the April car wreck. State Farm retained counsel for Jameson. After a jury trial, Jameson was found 75 percent at fault for the wreck. After a reduction of fault, a judgment was entered against Jameson in the total amount of $11,329,094.56. The judgment became final after Jameson’s appeal was dismissed.
Extra-Contractual Lawsuit
Simone received an assignment of Jameson’s extra-contractual claims and brought a lawsuit against State Farm for breach of contract and breach of the implied covenant of good faith and fair dealing.
The Extra-Contractual Lawsuit proceeded to a contested bench trial. Simone testified at trial that he, with his mother’s help, sent his offer to State Farm with the goal of trying to “resolve the matter” and “seek closure of the entire thing.” Simone went on to testify that he intended to resolve his claims against Jameson if State Farm provided the responses to his questions about other insurance for Jameson and provided a copy of Jameson’s policy.
State Farm also had its claims representative and her manager testify. Each confirmed that State Farm had all the information necessary to respond to Simone’s questions prior to the expiration of the 15 day deadline and did not send Jameson’s State Farm Policy to Simone. Additionally, each confirmed they did not answer Simone’s questions in writing and testified they preferred to have phone calls with unrepresented claimants. Finally, each confirmed that Simone’s questions and requests for information were reasonable given the circumstances.
Based on the excess nature of Simone’s claim against Jameson, the Court determined that State Farm acted unreasonably. The court noted that Simone had made reasonable requests when offering to settle his claim and that State Farm had all the information needed to provide a response to Simone and evaluate his claim. However, State Farm chose not to provide this information despite knowing of the potential excess exposure to Jameson if it did not settle Simone’s claim. Based on this, the Court determined State Farm was liable for the entire judgment entered against Jameson plus attorneys’ fees and interest.
Court Of Appeals Opinion
On appeal State Farm made two primary arguments on why the liability finding for the excess judgment was incorrect.
First, State Farm argued that there was not sufficient evidence that State Farm’s response and failure to accept Simone’s offer was unreasonable. The Court disagreed. Important to the Court’s decision was that Simone had requested that State Farm provide a copy of Jameson’s State Farm Policy and confirm he had no other insurance in place at the time of the wreck. The Court noted that State Farm had this information and the ability to provide same to Simone before the 15 day deadline. The Court noted that even State Farm agreed that it was reasonable for Simone to request such information given the magnitude of his injuries but State Farm failed to comply with Simone’s request and did not even attempt to provide the information in writing as directed. State Farm offered no real explanation for failing to provide the State Farm Policy and confirmation that there was no other insurance. Its only justification for failing to provide the information in writing was that State Farm preferred to communicate with unrepresented claimants by telephone. Given the magnitude of Simone’s injuries and Jamison’s limited insurance, it was unreasonable for State Farm not to comply with Simone’s demand and provide him with the written information he requested.
Second, State Farm also argued that its decision to offer Jameson’s $25,000 policy limits before Simone’s 15 day deadline demonstrated that it acted in good faith as a matter of law. The Court slapped down this argument while noting that in California, a policy limit offer alone cannot overcome other evidence demonstrating a breach of the implied covenant of good faith and fair dealing. Here, there was evidence that State Farm acted unreasonably when failing to provide Simone with a copy of Jameson’s policy and failing to confirm that Jameson had no other insurance. These failures were deemed unreasonable and supported State Farm’s liability for the entirety of the judgment entered in the underlying lawsuit.
Simone makes clear that an insurer’s obligations to a claimant extend further than making a timely offer of the policy limits and even if made timely, will not alone shield an insurer from complying with reasonable non-monetary conditions. Instead, an insurer should (and must) do everything reasonably possible to secure a settlement for the insured and avoid exposing the insured to an excess judgment. This is vital when the insurer has assumed the right to settle on behalf of the insured and the insured is facing a multi-million-dollar liability with limited indemnity coverage.
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Kirk Presley enjoys helping individuals and other lawyers with bad faith cases.
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