Court Rules In Favor Of Insurer In Bad Faith Case – Part 2

Last post, we discussed the specifics of a recent insurance bad faith case in California. The case was brought by an ATM service company against their insurer.

The service company claimed that their insurer committed bad faith by refusing to defend or indemnify them in connection to an ATM theft. As we mentioned last week, a lower court heard this case, and ruled in favor of the service company. This week, we will discuss what an appeals court decided in regards to this case.

After hearing this case, an appeals court in California reversed the lower court’s decision. The court ruled that the damages caused by the theft were not covered by the service company’s business insurance policy. Consequently, it held that the insurance company had no obligation to act in this case.

The court’s decision was based on its interpretation of the words “loss of use” in the insurance policy. The court determined that “loss of use” only referred to temporary losses of property, not permanent ones.

The court then stated that the losses incurred by the service company in regards to the ATM theft were permanent losses. Because of this, the court ruled that these losses were not covered under the language of the policy.

This case demonstrates how insurances cases can be complicated. It also illustrates how language issues can be very important and impactful in these cases. The results of an insurance bad faith case can sometimes turn on how a particular word or phrase is interpreted. In this case, the court’s interpretation of a three word phrase resulted in a reversal of a large judgment.

Thus, language can be critical in determining the extent of the protection a person or organization receives from an insurance policy and their  lawyer. For more info, visit


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