Brehm

Stuart Brehm IV appeals from the order of dismissal entered after the trial court sustained without leave to amend 21st Century Insurance Company’s demurrer to his second amended complaint for breach of the implied covenant of good faith and fair dealing. Brehm contends the trial court misapplied the genuine dispute rule, which protects an insurer from a bad faith claim when its denial of benefits was asserted in good faith and on reasonable grounds, and neither the express policy provision that authorizes the insurer to arbitrate uninsured motorist (UM) and underinsured motorist (UIM) claims nor Insurance Code section 11580.26, subdivision (b), which bars a cause of action for exercising the right to request arbitration of a claim under an insured’s UM/UIM coverage, precludes this action based on allegations 21st Century unreasonably failed to make a good faith effort to obtain a prompt, fair and equitable settlement of Brehm’s claim for UIM benefits. We agree with Brehm on each of these points and, accordingly, reverse.

FACTUAL AND PROCEDURAL BACKGROUND

1. Brehm’s Accident and Demand for UIM Benefits

According to the facts alleged in Brehm’s second amended complaint,…