Over the past 10 years, policy limit settlement demands with myriad conditions have become the norm. In many instances, the conditions are imposed in the hope that the insurer will falter in its efforts to comply. Unless there was strict compliance with every condition, the claimants argued, the demand was rejected and the policy was “open.” Recently, however, California courts have begun to recognize common-sense limitations to these “gotcha” tactics. In 2021, Pinto v. Farmers Ins. Exch., 61 Cal. App. 5th 676 (2021) clarified that to be liable for a bad faith failure to settle, the insurer must have acted unreasonably. In Palma v. Mercury Ins. Co., 2022 WL 3592722, issued on August 23, 2022, the Court of Appeal expressed its distaste for gamesmanship that is designed to prevent a settlement that an insurer is attempting to consummate.…

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