An insurer cannot deny payments to its insured without conducting a thorough investigation. Egan v. Mutual of Omaha Ins. Co., 24 Cal. 3d 809, 819 (1979)(“[I]t is essential that an insurer fully inquires into the possible bases that might support the insured’s claim”).

An insurance company has a duty to look for coverage and cannot just look for ways to deny coverage. Mariscal v. Old Republic Ins. Co., 42 Cal. App. 4th 1617 (1996)(insured determined that insured died of illness but ignored other medical records indicating that insured’s death was caused by auto accident); Betts v. Allstate Ins. Co., 154 Cal. App. 3d 688, 702 (1984)(insurance company relied on insured’s self-serving account of the accident and ignored the mass of other available evidence indicating insured’s negligence; obstinate “no pay” attitude justified punitive damages); Downey Savings & Loan Association v. Ohio Cas. Ins. Co., 189 Cal. App. 3d 1072 (1987); Hughes v. Blue Cross of Northern California, 215 Cal. App. 3d 832, 846 (1989)(insurer made no reasonable effort to obtain all medical records in reviewing the medical necessity of hospitalization).

An insurer must affirmatively seek out witnesses who can provide information in support of the insured’s claim. Frommoethelydo v. Fire Ins. Exchange, 42 Cal. 3d 208, 220 (1996); Mariscal at 1624; McCormick v Sentinel Life Ins. Co., 153 Cal. App.3d 1030, 1047-1048 (1984).

The insurer cannot in good faith reject its own experts’ advice. Neal v. Farmers Insurance Exchange, 21 Cal. 3d 910, 921-23 (1978).

Delgado v. Heritage Life Ins Co., 157 Cal App. 3d 262, 278-279 (1994)(evidence that insurer ignored evidence in the file which supported the claim, while focusing on facts to deny claim, supported an award of $3 million in punitive damages); Sprague v. Equifax, Inc., 166 Cal. App. 3d 1012, 1025 (1985)($ 4 million in punitive damages upheld where claims adjuster testified that he was instructed by a supervisor not to find ways to pay claims, but to find ways to deny claims); Caddice v. Ins. Co. of North America, 126 Cal. App. 3d 86 (1981)(the de facto practice of minimizing the payment of claims, as inferred through the testimony of claims adjusters and policy manuals); Tibbs v. Great American Ins. Co., 755 F. 2d 1370 (9th Cir. 1985)(bad faith failure to investigate where in –house counsel conducted a little investigation and ignored employees who said insured probably entitled to a defense).

The duty to investigate includes the duty to consider legal issues. Shade Foods, Inc. v. Innovative Product Sales & Marketing, Inc, 78 Cal. App. 4th 847, 908 (2000)(bad faith failure to evaluate choice-of-law issues).

Betts v. Allstate Ins. Co., 109 Cal. App. 3d 688 (1984). Refusal to face up to adverse evidence of insured’s liability for the accident. Punitive damages upheld.

Campbell v. Cal-Gard Security Services, Inc., 62 Cal. App. 4th 563, 571 (1998). “PAT took no investigation of Campbell’s claim or her excuse for late reporting. The jury could reasonably infer from that evidence that PAT had an established practice of not investigating claims and denying payment of them and therefore acted in conscious disregard of the rights of its insured.” Punitive damages upheld.

Jordan v. Allstate Ins. Co., 148 Cal. App. 4th 1062 (2007). Although the insurance company’s interpretation of the policy was reasonable, factual issues remained as to whether it conducted a reasonable investigation.

Walker v. Farmers Insurance Co, 153 Cal. App. 4th 965 (2007) (failure to investigate and other bad acts).

Pulte Home Corp. v. American Safety Indemnity Co., 14 Cal. App. 4th __ (2012) (pattern and practice of refusing coverage under additional insured endorsements; misrepresenting coverage; punitive damages upheld).