Dewitt

*236 Opinion

I.

INTRODUCTION

A liability insurer’s duty to defend its insured against third party claims applies to claims that are potentially within the scope of the insured’s policy. The insurer’s duty to indemnify applies only to claims that are covered by the policy. (Risely v. Interinsurance Exchange of the Automobile Club (2010) 183 Cal.App.4th 196, 207-208 [ 107 Cal.Rptr.3d 343 ].) “From the covenant of good faith and fair dealing implied by law in all contracts, and from [a] liability insurer’s duty to defend and indemnify covered claims, California courts have derived an implied duty on the part of [an] insurer to accept reasonable settlement demands on such claims within the policy limits.” (Hamilton v. Maryland Casualty Co. (2002) 27 Cal.4th 718, 724 [ 117 Cal.Rptr.2d 318 , 41 P.3d 128 ] (Hamilton).) Case law has established that an “insurer has a duty to accept a reasonable settlement offer only with respect to a covered claim” (i.e., a claim for which the insurer owes the insured a duty of indemnity). (Marie Y. v. General Star Indemnity Co. (2003) 110 Cal.App.4th 928, 958 [ 2 Cal.Rptr.3d 135 ] (Marie Y.).) The failure of a liability insurer to perform its implied…