General Liability Insurance

In November, Tyler wrote about insurance issues raised by both the European Union’s General Data Protection Regulation (GDPR) and the California Consumer Privacy Act, which goes into effect on January 1, 2020. California’s governor Jerry Brown signed two other cyber-related laws in September, which will also go into effect on January 1, 2020 – Assembly Bill 1906 and Senate Bill 327, which address security concerns relating to devices that are capable of connecting to the internet – the so-called Internet of Things or “IoT”. See California Civil Code 1798.91.04(a) et seq.

The bills largely mirror each other and, put very simply, require manufacturers of devices that are capable of being connected to the internet to equip them with “reasonable” security features that are both appropriate to the device and require a user to generate a new means of authentication before access is granted to the device for the first time. Technologists are debating whether the laws are good or bad, and if good, whether they go far enough. Regardless, the law will become effective and manufacturers of IoT devices will have to comply with them. The law does not provide for a private right of action; it permits the state’s Attorney General to enforce its provisions.

The new California law applies to all connected devices sold or offered for sale in California. Because California is such a large market, this likely means that all such devices sold in North America and Europe will comply with California’s regulations, and older, less secure devices will be diverted to countries with fewer regulations.

Continue Reading Are You Covered for California’s New IoT Laws?

image: Are you Covered?Insurance recovery partner Tyler Gerking and I have co-authored an article examining two recent cases from separate California state courts that we feel correctly interpret the phrase “that particular part” as it applies to certain CGL policy exclusions, and apply it in its intended narrow sense. The rulings in Pulte Home Corp. v. American Safety Indemn. Co. and Global Modular, Inc. v. Kadena Pacific, Inc. are good news for contractors and are in contrast to some recent decisions by federal courts.

It is encouraging to see California appellate courts studying the meaning of the actual policy language, and not simply accepting insurers’ broad brush straw-man arguments about what CGL policies are, or are not, intended to cover. By comparing the actual language of exclusions against each other and comprehending what each one was intended to exclude, the Pulte Home and Global Modular courts realized that each exclusion had a specific intent, and the terms of one exclusion could not be imparted to another exclusion, nor could they all be “mushed together” to make one large, catch-all type exclusion.

Read the full article discussing the two cases.

Are you Covered? note pinned to boardThis is part one of a two-part series looking at how court decisions in recent years have thwarted general contractors’ reasonable expectation of coverage under their general liability policies.

In early March, the Ninth Circuit Court of Appeals issued an unpublished opinion in Archer Western Contractors v. National Union, No. 15-55648 (filed Mar. 2 2017). The opinion held that the phrase “that particular part” as used in the “Damage to Property” exclusions in a CGL policy must be interpreted broadly to encompass “the entire project on which a general contractor is performing operations.” This is not the first time the Ninth Circuit has issued an unpublished opinion interpreting “that particular part” to apply to the entirety of a project.

The Ninth Circuit in these cases ignored the plain meaning of words that the insurance industry itself has explained should be construed in the narrowest possible sense. Policyholders, particularly general contractors, should beware this worrisome trend in the courts, as it is creating the potential for a gap in ongoing operations coverage that was not meant to exist. Continue Reading Courts Misunderstand the Meaning of “That Particular Part”

Blog-Image---attorney-clientAttorney invoices may be protected in their entirety by the attorney-client privilege during ongoing litigation. After litigation has concluded, however, those same invoices may be discoverable. So concludes the California Supreme Court in a fascinating ending to a case we have been following since last June of last year, County of Los Angeles Board of Supervisors v. Superior Court (opinion). In a 4-3 decision that mirrored the split we observed in oral argument, the Court reversed the decision of the Court of Appeal. Continue Reading California Supreme Court Concludes Attorney Invoices Privileged During Ongoing Litigation


I wrote an article for Risk Management discussing the Federal Aviation Administration’s long-awaited regulations for commercial drones weighing 55 pounds or less and the insurance coverage available to address drone risks. Insurance is widely available, but careful attention should be paid to differences in policy language. Also, expect insurers to incorporate features of the new regulations in their underwriting approach.

You can read the full article on Risk Management‘s website: FAA Clears Drones for Takeoff

In what appears to be the first published California decision on the issue, the Second District Court of Appeal recently held that a carrier must defend its insured when the claim may not be covered by the primary policy and  “potentially” falls within the carrier’s umbrella coverage.  In Legacy Vulcan Corp. v. Superior Court, 2010 WL 1730788, the court rejected the trial court’s holding that although the insurance policy provided both excess and umbrella coverage, for purposes of the duty to defend, the insurer’s obligations were limited to those of an excess insurer.  The trial court had also ruled that the duty to defend was only triggered upon the exhaustion of all underlying insurance and that the duty to defend could arise only upon a showing that the claims were “actually covered” by the policy.

The umbrella policy at issue, which afforded broader coverage than the primary policy, expressly provided a duty to defend in connection with the umbrella coverage.   The policy stated that the carrier “had the right and duty to defend any suit against the insured…if the damages were not within the terms of coverage of underlying insurance but were within the terms of coverage of this insurance.”  The appellate court found that this language did not place any limits on the duty to defend and rejected the insurer’s argument that the duty to defend was modified by the policy’s “retained limit” provision.  The court held that without language expressly relieving the insurer of the duty to provide a “first dollar” defense, the insured did not have to incur liability in excess of any “retained limit” before the duty to defend was triggered. As a result, the insured was entitled to an immediate defense from the umbrella carrier.  In addition, the court also found that the self-insured retention did not limit the duty to defend and only applied to indemnity payments.

Finally, relying on well-established California case law, the appellate court held that the correct standard for assessing the duty to defend was whether the insured could show a “potential” for coverage.  Since the umbrella coverage was acting as primary rather than excess coverage, the court applied the ordinary rules regarding the duty to defend in connection with primary liability coverage.  See Scottsdale Ins. Co. v. MV Transportation, 36 Cal. 4th 643, 654-655 (holding “a duty to defend arises if facts alleged in the complaint or other facts known to the insurer, potentially could give rise to coverage under the policy.”).