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Extra-Contractual Liability Law
 future bad faith litigation. Insurers should expect their “here’s why” letters to be subject to intense scrutiny.
Now for the caveats: First, the new rules only apply to demands made by lawyers. So insurers should look forward to — and look out for — ghost-written pro se demands. Second, the rules don’t apply after litigation starts or someone demands arbitration. Claimants may now be quicker to file suit. Third, the new rules do not prohibit claimants from including other conditions (like a declaration from the insured that they have no other insurance, no assets, etc.). As a result, onerous conditions will not disappear from demands. They will remain and continue to be judged on a “reasonableness standard.” Finally, the rules only apply to demands with time limits, i.e., that have a deadline for acceptance. Insurers should expect claimants to try to skirt the new rules by making demands ostensibly without a time limit, only to withdraw them later on some pretext. In short, the rules have changed a bit, but the game will stay mostly the same.
Jeffrey V. Commisso is Special Counsel with Sheppard, Mullin, Richter & Hampton, LLP’s San Diego, CA office. Contact him at

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