Mariscal

A man purchases an insurance policy for accidental death and dismemberment coverage. His wife is the beneficiary of the policy. He dies as a result of an auto accident which caused head injuries and, ultimately, heart failure. The insurance company conducts a perfunctory investigation of the wife’s claim and denies coverage, stating that “death was due to an illness and not caused by bodily injury due to an accident.” Evidence available to the insurance company, which it did not seek to discover, shows that death was caused by the accident.

The insurance company breached the covenant of good faith and fair dealing because it did not fulfill its obligation to protect the interest of its insured. When investigating a claim, an insurance company has a duty to diligently search for evidence which supports its insured’s claim. If it seeks to discover only the evidence that defeats the claim it holds its own interest above that of its insured.

Old Republic Life Insurance Company (Old Republic) appeals from that part of the judgment awarding damages in favor of respondent, Maria Mariscal (Mrs. Mariscal), for breach of the covenant of good faith and fair dealing. Substantial…