In a personal injury action, does a plaintiff have an obligation to cooperate with the insurer in order to avoid a claim against the insurer?

In the United States, however, a substantial body of law has developed approving of this practice. An oft-cited case on point is that of Critz v. Farmers Insurance Group, 230 Cal. App. 2d 788, 12 A.L.R. 3d 1142 (1964), wherein the rationale is aptly described by Friedman J. (at pp. 1154-55): When the insurer breaches its obligation of good faith settlement, it exposes its policyholder to the sharp thrust of personal liability. At that point, there is an acute change in the relationship between policyholder and insurer. The change does not or should not affect the policyholder's obligation to appear as defendant and to testify to the truth. He need not indulge in financial masochism, however. What may be his obligation to the carrier, it does not demand that he bare his breast to the continued danger of personal liability. By executing the assignment, he attempts only to shield himself from the danger to which the company has exposed him. He is doubtless less friendly to his insurer than he might otherwise have been. The absence of cordiality is attributable not to the assignment, but to his fear that the insurer has callously exposed him to extensive personal liability. The insurer's breach so narrows the policyholder's duty of cooperation that the self-protective assignment does not violate it.

The same procedure was endorsed in the subsequent judgment in Damron v. Sledge, 105 Ariz. 151, 460 P.2d 997 (1969), a decision that followed Critz v. Farmers Insurance Group, and so widespread has the practice become that such agreements are now commonly known as "Damron assignments".