General Liability Policies

February 08.2012

Developments in Insurance Law

The Litigation Section of the State Bar has just published their California Litigation Review, a review of cases decided in 2010. It includes an article by Farella attorneys John Green and Kathryn Oliver on recent developments in insurance law. As they discuss, the year 2010 produced a number of important California insurance cases, primarily the Ameron decision issued by the California Supreme Court. Download California Litigation Review_Insurance law developments - PDF

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October 21.2011

Duty to Defend is Determined Based on the Facts, not the Causes of Action, Alleged in the Complaint

In Career Systems Development Corp. v. American Home Assurance Co., No. C 10-2679 BZ, 2011 U.S. Dist. LEXIS 103999 (N.D. Cal. Sept. 14, 2011), Magistrate Judge Zimmerman granted an insured summary judgment finding that the insurer had a duty to defend based on the facts pled in the underlying litigation. This opinion is a reminder to policyholders that, under California law, an insurer’s duty to defend is determined based on the facts alleged in the complaint, not the causes of action that the plaintiff has chosen to plead. In other words, for a duty to defend to exist, underlying complaints...

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August 08.2011

Kaiser Cement v. ICSOP: Court of Appeal Grapples with Horizontal Exhaustion and Stacking

A recent decision by the California Court of Appeal for the Second District grappled with the concepts of “horizontal exhaustion” and “stacking” of policy limits in the context of an insured attempting to tap excess policies in a case involving continuous losses spanning multiple policy periods. Kaiser Cement and Gypsum Corp. v. Insurance Co. of the State of Pennsylvania, 2011 Cal.App.LEXIS 686 (filed June 3, 2011), involved an increasingly familiar factual scenario in which thousands of bodily injury claims were brought against Kaiser arising out of asbestos products manufacturing activities in ten different Kaiser facilities operated from 1944 until the...

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August 01.2011

Case Confirms Insurer Loses Right to Section 2860 Fee Cap Where Insurer Does Not Promptly and Fully Defend the Insured

In a recently decided California of Appeals case, Housing Group v. PMA Capital Ins. Co., 193 Cal. App. 4th 1150 (2011), the court examined the issue of whether a carrier breaches its duty to defend by stating it is “investigating” the claim (rather than unambiguously accepting the defense) and then failing to pay defense costs until after the underlying matter is over. The court in Housing Group held such conduct did not satisfy the duty to defend, and held the insurer therefore could not invoke the right under Civil Code § 2860 to limit the rates paid to independent counsel....

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June 06.2011

Harsh Result In Dispute Over Appointed Counsel

Even when carriers agree to defend an insured, policyholders and carriers can still get locked into disputes about who will provide such a defense. Policyholders often want to choose their own counsel while a carrier has its own idea about who should defend the case. The dispute in Travelers Property v. Centex Homes, C10-02757 (N.D. Cal. April 1, 2011) illustrates this problem and shows how a dispute over defense counsel can potentially lead the carrier to argue that the policyholder has breached its duty to cooperate and that such a breach relieves the carrier of both its duty to defend...

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March 28.2011

Japan’s Tragedy A Reminder To Review Your Business Interruption Coverage

The tragic events in Japan serve as a reminder of how fragile our lives and societies are. Businesses too can be fragile, and can be easily disrupted by events completely outside of our control. That’s one of the rationales behind commercial insurance. A little over a year ago, I wrote about the complexities and challenges of both purchasing, and making a claim on, business interruption insurance. (Business Interruption Coverage - 2/18/10) Because many US companies will be either directly or indirectly affected by the devastation in Japan, this is a good time to revisit that topic. US businesses that have...

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February 22.2011

Section 533 Does Not Bar Coverage for Innocent Co-Insureds

The California Supreme Court recently issued a decision in Century-National Ins. Co. v. Jesus Garcia, No. S179252, holding that California Insurance Code section 533, which bars coverage for intentional conduct, does not apply to coverage for innocent co-insureds. The Court examined this issue in the context of a fire insurance policy. The insureds, Jesus and Theodora Garcia, suffered substantial property damage to their home when their adult son – who was also an insured under the policy – set fire to his bedroom. Century-National denied coverage for the Garcias’ claim citing the policy’s exclusion for claims based on the intentional...

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December 07.2010

The State of the Insurance Market

The world is still in a state of financial flux. Yet during a period in which a couple of well known insurers (Kemper; Atlantic Mutual) finally hit insolvency and the biggest name of all, AIG, had to be bailed out by the US Government, the insurance market is in some ways actually surprisingly stable. Not that the carriers necessarily like it – despite the general financial turmoil, the insurance soft market is continuing, and some industry insiders wonder whether it’s here to stay. Even conservative predictions think that the soft market will continue for two to three more years. Worldwide...

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November 30.2010

California Supreme Court Denies Review of Howard v. American National

On November 23, 2010, the California Supreme Court declined review of the First Appellate District’s decision in Howard v. American National Fire Insurance Co., 187 Cal. App. 4th 498 (2010). As I noted in a prior blog post. Howard provides powerful, additional support for policyholders demanding that their liability insurer fund a settlement. In Howard, the Court of Appeal considered whether an insurer can be held liable for bad faith breach of its duty to settle if it rejects a settlement offer that is within the total available limits of all the insurers’ policies, but which exceeds the limits of...

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November 22.2010

The Ninth Circuit gets Gunderson Right while Finding Coverage for Slogan Infringement

Since the California Court of Appeal issued its decision in Gunderson v. Fire Insurance Exchange, 37 Cal. App. 4th 1106 (1995), insurers have used it for the proposition that an “insured may not speculate about unpled third party claims to manufacture coverage.” However, a closer reading of Gunderson‘s holding reveals that the key inquiry is not which claims the third party pled but rather which facts the third party pled. In the recent case of Hudson Insurance Co. v. Colony Insurance Co., No. 09-55275 (9th Cir. Nov. 5, 2010), the Ninth Circuit Court of Appeals had the opportunity to clarify...

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