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California appeals court backs Farmers in auto policy-limits settlement
The court found a binding settlement formed when Farmers accepted the policy-limits offer on Aug. 25, 2021, even after the claimant later sought to rescind using an asset declaration.
A California appeals court ruled that a claimant cannot undo an auto insurance policy-limits settlement once the insurer accepts the terms set out in a policy-limits demand, according to Insurance Business. The case stems from a Jan. 5, 2021 rear-end crash in Hesperia involving a Farmers-insured driver. The policy listed bodily injury limits of $15,000 per person and $30,000 per accident, making $15,000 the maximum available for the claimant’s injuries. Insurance Business reports that on July 30, 2021, the claimant’s lawyer sent Farmers a letter offering to settle for the total available policy limit of $100,000, or less, if Farmers accepted in writing by 4:00 p.m. on Aug. 30, 2021, and provided a declaration confirming the limits. Farmers accepted on Aug. 25, 2021, agreed to pay the $15,000 per-person limit, and sent the declarations page. The claimant later refused to sign and argued the deal was really for $100,000, that Farmers’ response was a counteroffer, and that inaccuracies in an asset declaration allowed her to rescind. The court rejected each argument, holding the policy-limits demand became a binding agreement when Farmers accepted those terms, and it ordered the trial court to grant summary adjudication on Farmers’ declaratory relief claim.