Chateau Chamberay Homeowners Ass’n v. Associated Intern. Ins. Co., 90 Cal. App. 4th 335 (2001)( under so-called “genuine dispute doctrine”, there is no bad faith if there was a “legitimate dispute” as to the insurance company’s liability); Century Sur. Co. v. Polisso, 139 Cal. App. 4th 922, 948-949 (2006)( explaining and limiting the doctrine); Filippo, supra at 1438
(doctrine not appropriate where there was no uncertainty in case law about words in policy at issue); Amadeo v. Principal Mutual Life Ins. Co., 290 F.3d 1152 (9th Cir. 2002)(doctrine not appropriate where insurance company’s interpretation of disability was arbitrary and pretextual).

At one end of the spectrum, an insurance company acts in bad faith when it knows there is coverage, but denies coverage anyway. Richardson v. Employers Liability Assurance Co., 25 Cal. App. 3d 232, 245 (1972)(punitive damages awarded where insurance company knew that insured had a valid uninsured motorists claim, but nevertheless forced insured to undergo a lengthy arbitration process); Delgado v. Heritage Life Ins. Co., 157 Cal. App. 3d 262, 277 (1994)(actual knowledge that denial of claim is wrongful demonstrates bad faith). At the other end of the spectrum, there may be only modest inferences of bad faith. Shade Foods, Inc. v. Innovative Products Sales & Marketing, Inc., 78 Cal. App. 4th 847, 909 (2000).