Featured Blog of the Month - National Insurance Law Forum: a Multi-Part Series Outlining the Decade’s Insurance Developments

Featured Blog of the Month - National Insurance Law Forum: a Multi-Part Series Outlining the Decade’s Insurance Developments

2000, 2001, 2002 – Of the final decisions issued by the California courts during those years which had a significant impact on insurers over the course of this decade, in addition to what Mike Aylward notes, I would add the following:
 
 
2000
  • No comparative bad faith. Kransco Int. v. American Empire Surplus Lines Ins. Co. (2000) 23 Cal.4th 390. There are still affirmative defenses, affirmative relief, and defenses insurers can pursue, and the insured’s conduct is relevant.
 
  • Construction defects that do not cause damage to property fall within the economic loss rule. Aas v. Superior Court (2000) 24 Cal.4th 627. Not an insurance case, but the ruling is in line with insurance coverage requirements that there be physical injury to tangible property.
 
  • An insurer’s reconsideration of whether there is coverage for a claim vitiates claims of bad faith. Shade Foods, Inc. v. Innovative Product Sales & Marketing (2000) 78 Cal.App.4th 847.
 
  • Other insurance may satisfy self-insured or deductible requirements. Vons Cos., Inc. v. United States Fire Ins. Co. (2000) 78 Cal.App.4th 52. This depends, of course, on the policy language. But where the insurance policy does not require the insured to pay the SIR, other insurance applicable to the claim may be used by the insured to satisfy that requirement.  
 
  • Self-insurance is not insurance. Montgomery Ward & Co. v. Imperial Cas. & Indem. Co. (2000) 81 Cal.App.4th 356. It looks like insurance and acts like insurance and has insurance in its name, but it is not insurance.  
 
2001
  • Where there is a genuine issue in dispute – factual or legal – there cannot be bad faith liability imposed on an insurer for advancing its side of the dispute. Chateau Chamberay v. Associated Int. Ins. Co. (2001) 90 Cal.App.4th 335.  
 
  • Cumis counsel is not required where insurer agreed to defend all claims even though it denied coverage for some, distinct claims and refused to prosecute insured’s cross-claim. James 3 Corp. v. Truck Ins. Exchg. (2001) 91 Cal.App.4th 1093.  
 
  • Additional insured is entitled to same considerations as named insured, insured can select insurer to pursue, and award of attorney fees against the insured are covered by the policy’s “supplementary payments provision” even if the claim upon which they are based is not covered by the policy. Presley Homes, Inc. v. American States Ins. Co. (2001) 90 Cal.App.4th 571. On the third point, there has been further clarification that attorneys fees awarded on claims that cannot be covered by insurance (i.e., the insured’s willful conduct) are not covered. Combs v. State Farm Fire & Cas. Co. (2006) 143 Cal.App.4th 1338. Further in State Farm General Ins. Co. v. Mintarsih (2009) 175 Cal.App.4th 274, the court held that there was no coverage for attorney fees awarded against the insured if based on a claim not potentially covered by the policy (there, a wage and hour claim).  
 
 
 
  • The insured must prove the amount of damage attributable to the covered portion of the loss in order to prove breach of contract. Golden Eagle Refinery Co. v. Assoc. Int. Ins. Co. (2001) 85 Cal.App.4th 1300. This decision was recently overruled in State of Calif. v. Allstate Ins. Co. (2009) 45 Cal.4th 1008, in which the court held the burden is on the insurer.  
 
 
2002
 
 
  • Insurance policy can be proven by secondary evidence, including oral testimony and standard forms, and other evidence. Dart Industries, Inc. v. Commercial Union Ins. Co. (2002) 28 Cal.4th 1059.  
 
  • Insured cannot settle around its insurer where the insurer is defending the insured. Hamilton v. Maryland Cas. Co. (2002) 27 Cal.4th 718.  
 
  • An affirmative defense that seeks damages in the form of a set-off is a claim for damages. Constructive Protective Services, Inc. v. TIG Specialty Ins. (2002) 29 Cal.4th 189.  
 
  • No duty to provide independent counsel even where counsel retained by insurer was staff counsel of insurer. Gafcon, Inc. v. Posnor & Assocs. (2002) 98 Cal.App.4th 1388.  
 
 
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