Appellant policyholders sought review of an order of the Superior Court of Los Angeles County (California), which refused to overrule respondent Insurance Commissioner's determination of damages on appellants' claim for damages as a result of cancellation of non-cancelable disability insurance policies. The commissioner made the allowances as the liquidator of an insurance company.

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Overview

Appellants were holders of non-cancelable disability insurance policies issued by their old insurance company. The old insurance company became insolvent. Appellants sought damages after rejecting reinsurance from the new insurance company. The insurance commissioner determined their damages and appellants challenged that determination, which the lower court affirmed. The court affirmed the order. The old insurance company's insolvency was a breach of the contract to which appellants were entitled to damages. The proper damages were not based on the replacement cost of obtaining similar insurance in another company because the insured under the old disability policy may not have been insurable under another insurance policy.

Outcome

The court affirmed the lower court's decision, finding that appellants' measure of damages for cancellation of their non-cancelable disability insurance policy was not based on the replacement cost of obtaining similar insurance in another company, but was correctly determined by the insurance commissioner to be based on each policyholder's share of the reserve.