A significant legal battle is unfolding in Los Angeles over a car accident case that has sparked a $900,000 dispute between two insurance companies. The case, now in federal court, has caught the attention of insurance professionals nationwide.
On August 20, 2025, United States Liability Insurance Company (USLI) initiated a lawsuit against The Travelers Companies and its affiliates in the Central District of California. USLI claims it has incurred nearly a million dollars in expenses while defending their shared policyholders in a prolonged auto accident case. They allege that Travelers, the primary insurer, failed to contribute any funds for this defense.
The incident at the heart of the case dates back to October 6, 2019. A car accident at the intersection of Wilshire Boulevard and Beverly Glen Boulevard involved Gabriel Sanchez, who claims he was stopped at a red light when another driver, Kasra Mizban, rear-ended his vehicle. Sanchez subsequently filed lawsuits against Mizban and another party, both of whom were covered by policies from Travelers and USLI. The lawsuits alleged negligence and sought damages for injuries Sanchez sustained.
By August 18, 2025, the parties reached a settlement, with Sanchez agreeing to accept the $250,000 limit of Travelers’ primary policy to resolve all claims related to the accident. Notably, USLI did not pay anything in this settlement.
USLI contends that it spent a total of $902,415.88 on legal defense, which includes $744,852.58 already paid to various legal and expert services, along with an additional $157,563.30 still owed. They argue that Travelers, as the primary insurer, was obligated to cover these defense costs but did not contribute at all.
The basis of USLI’s claim rests on California Insurance Code Section 11580.9(g)(1). This law states that when multiple insurance policies cover the same vehicle, each insurer must pay its share of defense costs relative to the damages paid. Since the settlement amount of $250,000 represents the full limit of Travelers’ policy, USLI argues that Travelers should be responsible for all related defense costs.
USLI’s umbrella policy specifies that while it will cover losses exceeding a certain limit, it is not required to defend claims covered by other insurance. However, USLI believes that this does not apply in this situation, as the primary policy limits were reached in the settlement.
In its lawsuit, USLI is seeking a court declaration that Travelers must reimburse them for the defense costs, along with attorneys’ fees and other related expenses. They are also asking for indemnity and contribution for the total defense costs incurred.
It is important to note that these claims made by USLI have not yet been proven in court. Travelers has not filed a response, and no court decisions have been made regarding the obligations of either party.
This case serves as a reminder of the complexities involved in insurance coverage, especially when multiple policies are involved. The outcome could have significant implications for how defense costs are allocated in future claims, particularly in situations where settlements do not reach the umbrella policy level. As the legal proceedings unfold, many in the insurance industry will be watching closely.