General Liability Policies

On December 16, 2015, the California Department of Motor Vehicles (CA DMV) issued draft regulations for the deployment (not just testing) of autonomous vehicles. When adopted, they may be the first such regulations in the country. The National Highway Transportation Safety Administration (NHTSA) is moving ahead with testing of self-driving technologies in anticipation of setting safety standards. Meanwhile, Google and virtually every major car manufacturer has stepped on the innovation gas pedal to develop self-driving technologies. Will regulators be ready when the cars are? How will the regulation of autonomous vehicles impact the liability landscape and, in turn, how that liability will be insured?
Continue Reading Autonomous Vehicles – How Will Regulators Keep Up With The Technology?


As Bay Area residents prepared for thousands of football fans and media to descend on their region for the Super Bowl, one began to hear the sorts of rumblings that typically precede big events. Traffic will be terrible. Parking will be worse. Good luck getting a table at a restaurant. Oh, and good luck finding a place a sleep if you’re from out of town.

Former Mayor Willie Brown had advice for the naysayers: Rent your house on Airbnb! “Everyone is going to make a killing, including the private citizens who are smart enough to schedule a vacation paid for by Airbnb’ing their homes.”

Continue Reading Insure Your Risk as an Airbnb Host

Toyota announced that it plans to invest $1 billion in a Silicon Valley research center for artificial intelligence (November 6, 2015). On November 10, Volkswagen said it had hired away from Apple its lead expert on self-driving cars. (Yes, Apple too has a secret car project.) While analysts’ views differ on when, most agree that it is only a matter of time before fully autonomous vehicles become mainstream.

The US Department of Transportation called recent innovations by car manufacturers a “revolution in safety.” Historically, automakers (strongly encouraged by insurers) have focused on engineering vehicles to enhance occupant protection in the event of a crash. That’s why automobiles today have a range of airbags – front, rear, side and even curtains – as well as a long list of safety enhancements, including structural reinforcements to the passenger compartments and advanced safety belts.

Today, vehicle safety has expanded into technologies that help prevent or mitigate crashes. Vehicles can automatically brake to avoid or minimize accidents, self correct steering if the driver wanders out of his or her lane, and can parallel park better than many humans. They do this by means of a variety of sensors, connected to a central computer running sophisticated software. By use of sensors and cameras, today’s modern car can “see” round corners, keep a steady (and safe) distance from the vehicle in front, and anticipate and prevent a crash. All of these technologies, though, still require an attentive driver with hands on the wheel.

Continue Reading Autonomous Vehicles (Part 2) – The Capabilities and Liabilities of Self-Driving Cars

Self-driving cars are coming.  In fact, Tesla Model S owners woke up on the morning of October 15, 2015 to discover that a software download to the cars has made them capable of steering and changing lanes at high speed, slowing and stopping, and self-parking, in “Autopilot” mode.  The future is now, and self-driving cars bring with them a host of unanswered questions relating to safety, liability, and the insurance for protecting against liability.

Over the next few months we’re going to produce a series of articles looking at issues affecting insurance raised by autonomous vehicles, and how those issues may develop and change as the degree of autonomy – and the number and types of autonomous vehicles on the roads – grows.  For many years the insurance industry has been a prime mover in the field of vehicle safety.  One of the main concepts behind the drive to develop autonomous vehicles is to reduce crashes, particularly ones that result in serious injury.  95% of fatalities from car crashes result from human error.  How will the insurance industry keep up, and how will it adapt to the changing scenarios?

Continue Reading Autonomous Vehicles – Where in the (Insurance) World Will They Go?

We encounter the following scenario from time to time: The defense counsel just scored a big victory, knocking out a key cause of action. The only problem is—the carrier now says that claim was the only covered cause of action, and since that claim has been dismissed, the insurer has no ongoing duty to defend. Can that be right? 

The short answer is no. The duty to defend is based on the “potential” for coverage. That means that, if there is any “potential” that liability will ultimately be established on a covered ground, there is a duty to defend. For example, if an insured is sued for intentional battery, but could be found liable based on negligence, there is a potential the ultimate liability will be covered, and thus the insurer has a duty to defend. 

Continue Reading Insurer Must Still Defend Even if Covered Claims Are Dismissed

Companies often monitor or record conversations between their employees and customers for training or quality control purposes. You’ve probably heard messages to this effect yourself. These announcements are meant to satisfy laws that prohibit monitoring or recording unless both parties to the call consent. Despite such precautions, however, companies sometimes run afoul of these laws and find themselves

In 2003, the California Supreme Court ruled that a company’s contractual transfer of insurance rights to a subsequent purchaser was invalid, as it violated the policy condition against assignments without insurer consent. (Henkel Corp. v. Harford Accident & Indemnity Co.)  The decision was surprising to many, as Asset Purchase Agreements routinely assign insurance policies along with other assets and liabilities of the seller. Many of these companies faced enormous exposure for so-called “long-tail exposures”—claims that individuals had been exposed to an injurious substance over a substantial period of time. Such liabilities are generally covered by the historical insurance policies issued at the time of such exposure or injury, and these policies are transferred as part of the sale to provide coverage for this assumed liability. The Henkel decision frustrated the intent of these transactions. It left purchasers holding the bag on liabilities without the assets that were intended to pay for such liabilities, and it gave a windfall to insurers who had agreed to cover those liabilities. 

Continue Reading California Supreme Court: Insureds May Freely Transfer Insurance Rights

On April 30, 2015, we blogged about Hartford Casualty Insurance Company v. J.R. Marketing, LLC, Case No. S211645, then set for oral argument in the California Supreme Court. [see the prior post: California’s “Independent” Cumis Counsel Regime Faces a Novel Challenge] The Court decided the case on August 10, 2015, ruling that Hartford could seek reimbursement of unreasonable or excessive fees directly from Cumis counsel. We’ll outline here the implications of the ruling and suggestions for how policyholders and Cumis counsel might respond. 

On the one hand, the Court took pains to describe its ruling as very narrow. Hartford had denied coverage and resisted paying the defense invoices even after the trial court found it owed a duty to defend. Squire Sanders, representing J.R. Marketing, then obtained an enforcement order requiring Hartford to pay its invoices within thirty days, but giving Hartford the right to seek reimbursement of uncovered fees and costs, including unreasonable or excessive fees, once the case was over. By the end of the case, Squire had been paid $15 million. The Court repeated that its decision was grounded in the enforcement order, which Squire had drafted and gave Hartford an express right to reimbursement. In that context, the Court held that allowing Hartford to recover from Squire in the first instance was consistent with the law of unjust enrichment and would not interfere in the attorney-client relationship. Running through the decision, including Justice Liu’s concurring opinion, is an undercurrent of suspicion that Squire, with an unsophisticated client and an enforcement order in hand, felt it had carte blanche to bill to its heart’s content. 

Continue Reading Independent “Cumis” Counsel Now Face Direct Claims for Reimbursement From Insurers