Is a tort action for bad faith and fair dealing an action for personal injury?

Whether an action for the tortious breach of the covenant of good faith and fair dealing is an action for personal injury was also addressed in Richardson v. Allstate Ins. Co. (1981) 117 Cal.App.3d 8, 12-13, 172 Cal.Rptr. 423. In Richardson, an 18-year-old woman sued her automobile insurer under several causes of action, including breach of the implied covenant of good faith and fair dealing. She sought recovery for economic loss and emotional distress because her insurer had refused to pay for surgical expenses incurred by her after she was injured in an accident at the age of 15. The trial court had ruled the bad faith action was barred by the one-year statute of limitations which applies to infringements of personal rights. (Code Civ.Proc., 340, subd. (3).)

The Richardson v. Allstate Ins. Co. court (supra, 117 Cal.App.3d 8, 172 Cal.Rptr. 423) reversed the trial court's decision and held that a cause of action for an [53 Cal.3d 129] insurer's breach of the implied covenant is subject to the two-year statute of limitations set forth in Code of Civil Procedure section 339, subdivision 1, because such an action is based on the infringement of property rights, not personal injury, notwithstanding the fact that plaintiff there had alleged a cause of action for emotional

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In conclusion, the Richardson v. Allstate Ins. Co. court reasoned it would be erroneous to find "a tort action against an insurer for bad faith is based upon an alleged interference with a personal right merely because mental distress is alleged. Breach of the implied covenant of good faith is actionable because such conduct causes financial loss to the insured, and it is the financial loss or risk of financial loss which defines the cause of action. Mental distress is compensable as an aggravation of the financial damages, not as a separate cause of action." (117 Cal.App.3d at p. 13, 172 Cal.Rptr. 423, fn. omitted.)