Carrie Cope on Shielding Insurers from Bad Faith in Settlement Negotiations: The Changing Need for the White Waiver
A white waiver protects an insurer against allegations from insured that a settlement offer was made in bad faith. California legislation enacted subsequent to the court opinion, out of which the white waiver arose, appears to obviate the need to for a white waiver for settlement negotiations during mediation but courts have not yet addressed how far that protection extends. In this expert commentary, insurance specialist attorney Carrie Cope, a partner in the Chicago office of Tressler, Soderstrom, Maloney & Priess, LLP, discusses the question of whether a white waiver is necessary for settlement discussions taking place prior to the mediation of California claims.
The author writes: “As California courts have held that an insurer’s good faith obligation does not end even after the commencement of litigation against it,[1] the insurer must fulfill its obligation to its insured while at the same time asserting its right to protect itself. An agreement called a “White Waiver” can protect an insurer from liability arising from allegations that it failed to fulfill its duty of good faith and fair dealing in settlement negotiations.”
Cope advises, “Although the broad scope of California Evidence Code §§1115-1128 seems to foreclose the need for a white waiver during mediation, prudent insurers should consider requesting that insureds execute a white waiver for any settlement communications arguably outside the mediation context or the purview of the above referenced Code sections.”
Cope reminds practitioners that white waivers only address issues arising under California state law and do not apply in Federal Court. However, Cope concludes “The white waiver can be an effective tool for protecting insurers against allegations of bad faith arising from settlement negotiations in situations where other protections, such as state and federal evidentiary laws, may not apply.”