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Take Care in Responding to Pre-litigation Requests to Disclose Policy Limits

An insurer that refused to reveal its policy limits pre-suit, and later rejected a pre-trial demand above policy limits, was recently ordered to pay more than $1 million in costs to a man who lost his leg in a car accident.

In Aguilar v. Gostischef (Los Angeles County Super. Ct. No. EC 039462; 2013 DJDAR 13678) the Second Appellate District (Division 8) affirmed the trial court's ruling that a California Code of Civil Procedure Section 998 offer (“CCP 998 offer”) above policy limits is made in good faith if there is a reasonable possibility that it could be accepted under the circumstances. Whether a Section 998 offer is reasonable depends on the information available to the parties as of the date the offer was served.

In Aguilar, plaintiff's pre-trial CCP 998 offer above policy limits was held to have been made in good faith under the circumstances which included not only the severe extent of plaintiff's injuries, but the insurer's refusal to reveal the amount of policy limits pre-litigation.


Plaintiff, Ed Aguilar, lost a leg in a motor vehicle accident involving Larry Gostischef. Gostichef's insurer, repeatedly ignored Aguilar's pre-litigation demands to reveal the amount of Gostischef's policy limits.

Suit was filed and defendant Gostischef ultimately made a CCP 998 offer to settle at his policy limit, revealing that it was $100,000. Aguilar wrote to Gostischef's insurer stating that he was entitled to an excess judgment (above policy limits), because the insurer ignored his pre-litigation requests for disclosure of the amount of policy limits and attempts to settle, and he asked for $700,000 under CCP 998. Gostischef's insurer rejected Aguilar's offer, and again offered the $100,000 policy limits.

The matter went to trial and Aguilar obtained a $2,339,657 verdict. Aguilar then asked for $1,639,451 in costs, based on his CCP 998 offer. While a prevailing plaintiff such as Aguilar would normally be entitled to recover its costs whether it had made a CCP 998 or not, plaintiffs obtaining a verdict more favorable than their CCP 998 offer may also recover pre-judgment interest, as well as their expert costs (in the court's discretion). As the Aguilar case demonstrates, those additional costs can be substantial.

Gostischef's insurer contended that Aguilar's CCP Section 998 offer was not made in good faith because it could not reasonably expect to be liable for the amount of Aguilar's $700,000 offer, given the policy limit was $100,000. The trial court found that Aguilar's $700,000 CCP 998 was made in good faith and awarded plaintiff almost the entire amount of costs claimed (over $1 million). The Court of Appeal affirmed the trial court's costs award, and clarified that a CCP Section 998 offer is made in good faith if there is a reasonable possibility that it will be accepted under the circumstances.

While a CCP 998 offer may be deemed unreasonable if there is no way to know if the offer is fair, here Aguilar had repeatedly asked Gostischef's insurer about the amount of his policy limits and the insurer repeatedly ignored him. Gostischef's insurer was consequently unable to convince the court that Aguilar had no reasonable expectation that the insurer would accept his CCP Section 998 offer. Moreover, Gostischef's insurer knew that it could be liable for a judgment that was more than his policy limits based on its correspondence with Aguilar. Thus, under the circumstances (Gostischef's refusal to reveal the amount of policy limits pre-litigation, and the extent of Aquilar's injuries), the appellate court affirmed the trial court's conclusion that Aguilar acted in good faith when making his CCP 998 offer above policy limits.

Summary and Analysis

Traditionally, insurance companies have refused to reveal the amount of policy limits to plaintiff's counsel pre-litigation, even though the amount of policy limits must be revealed in response to discovery once litigation has commenced [see Judicial Council Form Interrogatory 4.1(e)].

In Boicourt v. Amex Assurance Co. (2000) 78 Cal. App. 4th 1390, the court held that an insurer's blanket policy of refusing to disclose policy limits in advance of litigation may give rise to a bad faith claim. The Boicourt court reasoned that a liability insurer is “playing with fire” when it refuses to disclose policy limits. Such refusal “cuts off the possibility of receiving an offer within policy limits” by the insurer's “refusal to open the door to reasonable negotiations”. The Aguilar v. Gostischief decision confirms the Boicourt ruling that a liability insurer is “playing with fire”, and potentially exposing itself to an excess judgment, if it refuses to disclose policy limits, even pre-litigation.

In the circumstances, insurers should carefully review their policy toward revealing the amount of policy limits in response to a pre-litigation request from plaintiff's counsel, especially when the limit is requested on the stated ground that plaintiff's counsel needs it to make a policy limits demand, and should consider disclosing the information.

Paul Green is an associate in the Los Angeles office and a member of the firm's healthcare practice group. He can be reached at 213.489.4411, or .