June 1, 2021

McIsaac v. Foremost Ins. Co. Grand Rapids, MI., A160389 (May 19, 2021)

Plaintiff was injured in an accident with an underinsured driver and sought coverage under the uninsured/underinsured motorist (UM) coverage of plaintiff’s policy. Plaintiff was unable to reach agreement with his insurer and sued the insurer for breach of contract, bad faith, and other claims. The insurer petitioned to stay the bad faith action and compel arbitration of the coverage claims under the arbitration provision of the policy included in every UM policy under Insurance Code section 11580.2. The trial court denied the petition because the lawsuit involved not only a dispute over coverage, but also bad faith claims, which are not subject to arbitration under section 11580.2.

The Court of Appeal reversed. While bad faith claims are not subject to arbitration under section 11580.2, the insurer here did not seek to arbitrate the bad faith claims–it sought merely to stay them pending resolution of the arbitrable claims. The allegations of bad faith were not a valid basis to deny arbitration of the coverage-related claims.