Boicourt

No less an authority on insurance law than John Alan Appleman declared 40 years ago that a liability insurer “ ‘is playing with fire’ ” when it refuses to disclose policy limits. Such a refusal “ ‘cuts off the possibility of receiving an offer within the policy limits’ ” by the company’s “ ‘refusal to open the door to reasonable negotiations.’ ” (See Johanek v. Aberle (D.Mont. 1961) 27 F.R.D. 272, 280 , quoting Appleman, Circumstances Creating Excess Liability, appearing in the 1960 proceedings of the Section of Insurance, Negligence and Compensation Law of the American Bar Association, p. 315.)

The present case involves another insurer who, at least allegedly, played with fire in refusing to disclose policy limits. Actually, because California law is quite clear that insurers may not disclose policy limits absent written permission from the insured, the insurer’s sin here was a blanket refusal to contact the insured to see if he wanted the policy limits disclosed. But functionally it was the same thing. The insurer’s refusal to disclose (or in California, the refusal to give the insured the option of disclosing) policy limits may have foreclosed a possible settlement of…