50 Exchange Terrace LLC suffered losses from frozen burst pipes that caused water damage to its property and tendered a claim to its insurer, Mount Vernon Specialty Insurance Company. The parties disputed the cost of repairs (i.e., the amount of the loss) and Mount Vernon demanded appraisal to resolve the dispute. Rather than proceeding with appraisal, 50 Exchange filed suit in California state court, asserting that Mount Vernon had wrongfully withheld policy benefits pending the appraisal. Mount Vernon removed the case to federal court based on diversity jurisdiction. The federal district court then dismissed the suit for lack of ripeness and Article III standing.
Continue Reading Appraisal of Amount of Loss is a Predicate to Article III, Injury-In-Fact Standing for a Suit Alleging Wrongful Withholding of Policy Benefits

In 2015, Continental Casualty Company issued a commercial general liability policy to Zongwei Shen dba Nobles Massage Spa. The policy covered Shen (the spa owner) and Zhong Xin (the spa manager and Shen’s wife) for damages because of bodily injury that occurred during the policy period. The policy contained an abuse or molestation exclusion that excluded coverage for bodily injury “arising out of” (a) the “actual or threatened abuse or molestation by anyone of any person while in the care, custody or control of any insured,” or (b) the negligent employment, supervision, or retention “of a person for whom any insured is…
Continue Reading The California Court of Appeal Interprets the Meaning of “Care, Custody, or Control” in the Context of an Abuse or Molestation Exclusion

In December 2020, Plaintiff Erin Hughes applied for homeowners coverage for her Malibu home with her Farmers’ insurance agent. Hughes obtained a fire policy through the California FAIR Plan and a homeowners policy through Farmers that insured the property against perils not covered by the FAIR Plan policy.
Continue Reading An Insurer is not Vicariously Liable for Actions by an Agent That Are Outside the Scope of the Agency Relationship and Were Performed in the Agent’s Dual Role as a Broker

In its latest Covid-era coverage case, John’s Grill, Inc. v. Hartford Financial Services, Group, Inc., the California Supreme Court held that an insured cannot use the “illusory coverage doctrine to transform the policy’s limited virus-related coverage into unlimited virus-related coverage.” In so holding, the Court reiterated the long-standing rule that “explicit and unambiguous policy limitations” will be enforced as written. …
Continue Reading John’s Grill, Inc. v. Hartford Financial Services, Group, Inc.: Illusory Coverage, Unambiguous Policy Language, and the Enforceability of Limited Coverage Endorsements

In Truck Ins. Exch. v. Kaiser Cement, 321 Cal. Rptr. 3d 761, 549 P.3d 781 (2024), the California Supreme Court answered the question left open by Montrose Chem. Corp. v. Superior Ct., 9 Cal. 5th 215 (2020) (Montrose III): for a continuous injury or damage spanning multiple policy periods, must an insured exhaust all implicated primary policies spanning the entire period of injury or damage prior to accessing any excess policy during that period. …
Continue Reading The California Supreme Court Confirms Vertical Exhaustion Applies for First-Layer Excess Insurers

In a suspicious insurance claim, it is common for insurers to request that an insured answer questions about the claim at an examination under oath (“EUO”). But a new opinion from the California Court of appeal changes what an insured can record at an EUO. In Myasnyankin v. Nationwide Mut. Ins. Co., — Cal. Rptr. 3d –, 2024 WL 340287 (Jan. 30, 2024), the court held that an insured can now demand to videotape not only the person taking the EUO but also anyone else present during the proceeding. In so ruling, the court relied on California Insurance Code section 2071.01(a)(4)…
Continue Reading New Decision Gives an Insured the Right to Videotape Examinations Under Oath

The Motor Carrier of Property Permit Act (the “MCPPA”) sets forth insurance requirements for commercial motor carriers in California. There is a dearth of legal authority interpreting the MCPPA, which was adopted in 1996. Although there is case law interpreting analogous provisions under the California Public Utilities Code, the predecessor to the MCPPA, it is unclear whether those cases are still good law. Recently, however, California courts have clarified the interpretation and application of the MCPPA in two respects. …
Continue Reading California Courts Clarify the Interpretation of the MCPPA

For years, plaintiff’s attorney Montie S. Day has sued California auto insurers, arguing that the policy exclusion precluding coverage for first-party diminution of value damages claims is unenforceable. On November 30, 2023, the Ninth Circuit Court of Appeals in Uyanik v. Wawanesa (an unpublished decision) affirmed the Northern District of California Court’s dismissal of Ali Uyanik’s (Day’s client) first amended complaint and sanctioned Mr. Day $5,000 for pursuing a frivolous appeal. The Court held that Uyanik’s breach of contract claim was “grounded in the plainly incorrect assertion that California law requires insurance providers to coverer all losses, including diminution of vehicle value…
Continue Reading Attorney Challenging First-Party Diminution of Value Claims Sanctioned by Ninth Circuit

In the wake of the Covid-19 pandemic lockdown orders, policyholders were driving less and insurance company severities and loss ratios were reduced. This resulted in a temporary increase in insurance company profits. Beginning in April 2020, the California Department of Insurance (“DOI”) issued a series of Bulletins, ordering insurers to provide premium refunds to policyholders. Initially, many insurers complied, providing partial refunds during the early months of the pandemic.
Continue Reading The Tide Shifts in California Covid Premium Refund Cases

The concept of fortuity is fundamental to insurance law. That is because insurance protects against the risk of contingent or unknown events or losses – not certainties of loss. Cal. Ins. Code § 22. Thus, in the context of third-party liability insurance, most policies condition coverage on an “occurrence,” meaning an “accident,” that causes bodily injury, property damage or personal injury.[1]…
Continue Reading Can an Insured’s Mental Incapacity or Insanity Convert Non-Accidental Conduct into an Accident?

In Bennett v. Ohio Nat’l Life Assur. Corp., 92 Cal. App. 5th 723, the California Court of Appeal addressed when the statute of limitations runs for a disability insurance claim. The Court held that the statute of limitations for a disability claim did not accrue until every element of the cause of action – including damages – was complete. Therefore, in Bennett, the statute of limitations did not begin to run at the time of the denial, but years later when Ohio National stopped making disability payments.
Continue Reading A Primer on When a Cause of Action Accrues for Statute of Limitations Purposes

Auto insurers are often asked by their insureds and third-party claimants to pay for what are known as “diminished value” damages in connection with car accidents. Generally speaking, “diminished value” is the loss of market value of the damaged vehicle caused by the accident. Cars that have been involved in accidents are generally worth less than cars that have not. That is one of the reasons Carfax reports exist, identifying whether a particular vehicle has been involved in a significant accident.
Continue Reading Are Third-Party Diminished Value Damages Claims Covered in California?

In an issue of first impression, the Ninth Circuit Court of Appeals affirmed summary judgment for Allstate and held that the two-year statute of limitations for bad faith claims arising out of an uninsured/underinsured motorist claim begins to run when the claimant should have known about the insurer’s alleged bad faith acts, rather than when the claim is resolved. In Marinelarena v. Allstate Northbrook Indem. Co., 2023 WL 3033498 (9th Cir. 2023), the plaintiff alleged that she suffered injuries in a 2016 car accident with a hit and run driver. Two years later, in January 2018, Marinelarena made a policy limit…
Continue Reading Ninth Circuit Confirms that the Two-Year Statute of Limitations in a Bad Faith UM/UIM Claim Begins when the Insured Should Have Known About the Insurer’s Alleged Bad Faith Acts