A $900,000 fight over who pays the legal bills in a Los Angeles car crash case is now front and center in federal court, and insurance pros across the country are watching closely.
On August 20, 2025, United States Liability Insurance Company, or USLI, filed a lawsuit against The Travelers Companies and its affiliates in the Central District of California. The reason? USLI says it’s out nearly a million dollars after defending their mutual policyholders in a drawn-out auto accident case - while Travelers, the primary insurer, allegedly didn’t chip in a cent for the defense.
Let’s break down what’s at stake. On or about October 6, 2019, a car accident at Wilshire Boulevard and Beverly Glen Boulevard in Los Angeles led to lawsuits from Gabriel Sanchez, who claimed he was stopped at a red light when Kasra Mizban rear-ended his vehicle. Sanchez sued Kasra Mizban and Nasser Mizban, who were covered by both a Travelers primary auto policy and a USLI umbrella policy. The lawsuits - filed in January 2021 (case no. 21STCV02647) and October 2021 (case no. 21STCV36629, later dismissed) - alleged negligence and negligent entrustment, with Sanchez seeking damages for injuries he said required medical treatment.
The underlying action settled on August 18, 2025, with Sanchez agreeing to accept the $250,000 policy limits of the Travelers primary policy in full and final settlement of all claims related to the accident. USLI paid nothing in settlement with Sanchez.
Here’s where things get complicated: USLI claims it paid $744,852.58 to counsel, experts, vendors, and mediators in the defense of its insureds in the underlying action and has incurred an additional $157,563.30 that remains due and payable, for a total of $902,415.88. USLI alleges that Travelers, as the primary carrier, had the obligation to defend the underlying action but paid nothing in the defense of its insureds.
USLI’s argument is based on California Insurance Code Section 11580.9(g)(1), which provides that when two or more personal policies afford liability insurance on the same motor vehicle, and one is primary and the other is excess, each insurer shall pay its share of defense costs in proportion to the amount of damages paid. Since the settlement was for $250,000, which equals 100% of Travelers’ policy limits and 0% of USLI’s policy limits, USLI claims Travelers is required to fund 100% of the defense costs in connection with the underlying action.
The USLI umbrella policy states: “If you are legally liable to pay damages for a loss to which this insurance applies, we will pay your net loss in excess of the retained limit. … We are not, however, obligated to defend any claim or suit which is covered in whole or in part by other insurance available to you, whether or not designated as primary, excess or contingent; provided, however, this shall not apply to insurance written specifically as excess coverage over this policy.” The policy defines the retained limit as the greater of the minimum underlying limits, the limit set forth on the schedule of underlying insurance, or the actual limit of underlying insurance available for injury or damage, without reduction for defense costs, court costs, investigation expenses, interest, or other costs.
USLI is asking the court to declare that Travelers must reimburse them for all those defense costs, plus attorneys’ fees, prejudgment interest, and other relief as the court deems just and proper. They’re also seeking indemnity and contribution for the $902,415.88 in defense costs.
It’s important to remember that these are USLI’s claims, not established facts. Travelers has not yet filed a response, and the court has not made any findings or decisions. All statements regarding Travelers’ obligations are claims made by USLI in the complaint.
For those in the insurance business, this case is a reminder of the importance of clear policy language and coordination between carriers. When multiple policies are in play, who pays for what can get complicated quickly. The industry will be following this case closely, as the court’s decision could influence how defense costs are split in future claims - especially when settlements do not reach the umbrella layer.
