Is there an implied obligation of good faith and fair dealing that requires an insurer to settle a claim against its insured?

In Comunale v. Traders & General Ins. Co. (1958) 50 Cal.2d 654, 328 P.2d 198, when considering the nature of a covenant of good faith and fair dealing the court held that such a covenant, existing in all contracts, requires an insurer to settle a claim against its insured in an appropriate instance even though the express terms of the policy may not impose any such duty. The court stated at page 663, 328 P.2d 198: "[I]t is the rule that where a case sounds both in contract and tort the plaintiff will ordinarily have freedom of election between an action of tort and one of contract.... An exception to this rule is made in suits for personal injury caused by negligence, where the tort character of the action is considered to prevail ... but no such exception is applied in cases, like the present one, which relate to financial damage...." The complaint in Comunale was filed less than four years but more than two years after the cause of action arose. The court rejected the argument that an action on an implied obligation arising out of contract is not on the written instrument; consequently the four-year term of section 337, subdivision (1) of the Code of Civil Procedure is not applicable, and it held the action was not barred by any statute of limitations.