USLI Sues Travelers Over $900K Defense Costs in Los Angeles Auto Accident Case
Los Angeles, August 25, 2025 – United States Liability Insurance Company (USLI) has filed a lawsuit against The Travelers Companies and its affiliates in the Central District of California, demanding reimbursement of approximately $902,415.88 in defense costs incurred during a Los Angeles auto accident case. The legal battle, initiated on August 20, 2025, stems from a dispute over which insurer should bear the costs of defending their mutual policyholders in a settled lawsuit, highlighting complexities in insurance coordination and cost-sharing.
Case Background
The dispute originates from a car accident on October 6, 2019, at Wilshire Boulevard and Beverly Glen Boulevard in Los Angeles. Gabriel Sanchez, the plaintiff, alleged he was rear-ended by Kasra Mizban while stopped at a red light. Sanchez filed lawsuits in January 2021 (case no. 21STCV02647) and October 2021 (case no. 21STCV36629, later dismissed), claiming negligence and negligent entrustment against Kasra Mizban and Nasser Mizban. Both defendants were covered by a Travelers primary auto policy and a USLI umbrella policy. The case settled on August 18, 2025, with Sanchez accepting the $250,000 policy limit of Travelers’ primary policy, with no contribution from USLI.
USLI’s Claims
USLI alleges it incurred $744,852.58 in defense costs for counsel, experts, vendors, and mediators, with an additional $157,563.30 still outstanding, totaling $902,415.88. According to USLI, Travelers, as the primary insurer, was obligated to cover these costs but failed to contribute any funds. USLI bases its claim on California Insurance Code Section 11580.9(g)(1), which stipulates that when multiple policies cover the same vehicle, the primary insurer must pay defense costs proportional to the damages paid. Since Travelers’ policy covered 100% of the $250,000 settlement, USLI argues Travelers should bear the full defense cost.
The USLI umbrella policy further supports their position, stating it is not obligated to defend claims covered by other insurance unless specifically written as excess over USLI’s policy. The policy defines the retained limit as the actual limit of underlying insurance (in this case, Travelers’ $250,000) without reduction for defense costs or other expenses.
Relief Sought
USLI is seeking a court declaration that Travelers must:
- Reimburse the full $902,415.88 in defense costs.
- Cover USLI’s attorneys’ fees, prejudgment interest, and additional relief deemed appropriate by the court.
USLI also requests indemnity and contribution for the defense expenses, emphasizing that Travelers’ inaction left USLI to shoulder the financial burden alone.
Implications for the Insurance Industry
This lawsuit underscores the complexities of cost-sharing between primary and excess insurers, particularly in cases involving multiple policies. The outcome could set a precedent for how defense costs are allocated when settlements do not tap into umbrella policies. Industry experts note that clear policy language and coordination between carriers are critical to avoiding such disputes. The case also highlights the importance of California’s insurance code in determining financial responsibilities, which may influence future claims nationwide.
Current Status
Travelers has not yet filed a response to the lawsuit, and the court has not issued any rulings. The allegations remain unproven, and the case is in its early stages. Insurance professionals are closely monitoring the proceedings, as the decision could impact how insurers interpret their obligations under similar circumstances.
For further details, the public can access the court filings through the Central District of California’s records or follow updates via insurance industry publications.