Table of Contents
CHAPTER 1: INSURANCE TERMINOLOGY & BASIC
CONCEPTS
A. GENERAL INSURANCE PRINCIPLES
§1:10 Introduction
§1:10.10 Insurance policy is contract
§1:10.20 Contract requirements
§1:10.30 Risk of loss must be fortuitous and unknown
§1:10.40 Insured party must have insurable interest
§1:10.50 Unenforceable insurance contracts
B. CATEGORIES AND TYPES OF
INSURANCE OVERVIEW
§1:20 Introduction
§1:20.10 First party coverage vs. third party coverage
§1:20.20 Specific forms of insurance
CHAPTER 2: THE BUSINESS OF INSURANCE
A. PRIVATE INSURANCE COMPANIES
§2:10 Introduction
§2:10.10 Forms of private insurance companies
§2:10.20 Structure of insurance companies
B. GOVERNMENTAL REGULATION
OF INSURANCE COMPANIES
§2:20 Introduction
§2:20.10 History of regulation
§2:20.20 Regulation in California
§2:20.30 Public policy considerations
§2:20.40 Additional rights and duties of insurance companies
C. STATUTORY AND
ADMINISTRATIVE REGULATION OF INSURANCE
§2:30 Introduction
§2:30.10 McBride-Grunsky Insurance Regulatory Act
§2:30.20 Unfair Insurance Practices Act (UIPA)
D. SETTING RESERVES
§2:40 Introduction
§2:40.10 Setting reserves
§2:40.20 Method of computation
E. ENTERING INTO A CONTRACT
FOR INSURANCE
§2:50 Contracts for
insurance
§2:50.10 Requirements for contract formation
§2:50.20 When policy takes effect
§2:50.30 Oral contracts
§2:50.40 Binders and covering notes
§2:50.50 Implied contract of insurance
§2:50.60 Insurance contracts may be effective immediately
§2:50.70 Issuance and delivery of the policy
F. FORM
Form 2:1 Sample Written
Insurance Binder
CHAPTER 3: RIGHTS, DUTIES & LIABILITIES
OF BROKERS & AGENTS
A. AGENTS AND BROKERS IN GENERAL
§3:10 Introduction
§3:10.10 Distinction between brokers and agents
§3:10.20 Insurance agents and general agents
§3:10.30 Insurance brokers
§3:10.40 Persons acting in dual capacity
§3:10.50 Authority of agents to bind insurers
B. TORT LIABILITY OF AGENTS
AND BROKERS
§3:20 Introduction
§3:20.10 Liability of agent to insured
§3:20.20 Liability of broker to insured
§3:20.30 Vicarious liability of insurers
§3:20.40 Liability of agents and brokers to insurer
§3:20.50 Liability of agent to insurer
§3:20.60 Liability of broker to insurer
C. FORMS
Form 3:1 Sample First Party
Complaint Against Agent or Broker and Insurer for Breach of Contract, Breach
of Implied Covenant of Good Faith and Fair Dealing
Form 3:2 Sample Deposition Issues for Broker or Agent
Form 3:3 Special Interrogatories to Broker or Agent
Form 3:4 Sample Demand for Inspection to Insurer
Form 3:5 Sample Language for Subpoena to Commissioner of Insurance
Identifying Notices of Appointment
Form 3:6 Sample Cause of Action for Negligence Against Agent
Form 3:7 Sample Cause of Action for Negligent Misrepresentation Against
Agent of Insurer
CHAPTER 4: THE INSURANCE POLICY
A. STATUTORY REQUIREMENTS OF THE POLICY
§4:10 Introduction
§4:10.10 Necessary terms
B. FORMS OF INSURANCE
POLICIES
§4:20 Standard vs.
nonstandard forms
§4:20.10 Standard forms
§4:20.20 Nonstandard (manuscript) forms
C. CONTENTS OF AN INSURANCE
POLICY
§4:30 Introduction
§4:30.10 Declarations page
§4:30.20 Certificate of insurance
§4:30.30 Insuring clause
D. FORM
Form 4:1 Sample
Standardized CGL Form (CG 00 01 10 01)
CHAPTER 5: INSURANCE POLICY
INTERPRETATION & ANALYSIS
A. GENERAL PRINCIPLES OF INSURANCE
POLICY INTERPRETATION
§5:10 Principles of
insurance policy interpretation
§5:10.10 Interpretation as a matter of law and application of facts
§5:10.20 Special practice point: Procedure for analyzing an insurance policy
B. AMBIGUOUS AND
UNCONSCIONABLE LANGUAGE
§5:20 Ambiguity in language
of insurance policy
§5:20.10 Determining the existence of ambiguity
§5:20.20 Rules for resolving ambiguities
§5:20.30 Unconscionable provisions
C. RULES OF INTERPRETATION
§5:30 Rules of insurance
policy interpretation
§5:30.10 Rules of interpretation
§5:30.20 Recent guiding principles of policy interpretation
D. STATUTORY CONSIDERATIONS
IN INTERPRETING POLICIES
§5:40 Necessity of
considering statutes in policy interpretation
§5:40.10 Specific provisions applicable to all insurance policies
§5:40.20 Implied duty to defend in all liability policies
§5:40.30 Statutory prohibition against indemnifying unlawful acts
§5:40.40 Prohibition against indemnifying for fines and penalties
§5:40.50 Prohibition against indemnifying for willful acts
§5:40.60 No coverage for punitive damages
§5:40.70 Sanctions pursuant to CCP §128.5
§5:40.80 Indemnification for losses from contingent or unknown events
E. CASE LAW AND SECONDARY
SOURCES IN POLICY INTERPRETATION
§5:50 Sources for policy
interpretation
§5:50.10 Case law considerations in interpretation of policies
§5:50.20 Secondary sources for policy interpretation
§5:50.30 Insurance treatises
F. CONFLICT OF LAW OF
MULTIPLE STATES
§5:60 Policy subject to
interpretation of the law of multiple states
§5:60.10 Conflict of law analysis
G. FORMS
Form 5:1 Sample Insurance
Policy Inventory Form
Form 5:2 Sample Letter to Client Requesting Copy of Policy
CHAPTER 6: POLICY TERMINATION
A. CANCELLATION BY THE INSURER
§6:10 Introduction
§6:10.10 No insurer right to cancel
§6:10.20 Procedure for canceling policy
§6:10.30 Limitations on right of cancellation
§6:10.40 Notice by mail
§6:10.50 Refund of premiums upon cancellation
§6:10.60 Insurer entitled to offset for premiums
§6:10.70 Bad faith arising from improper attempts to cancel insurance
B. TERMINATION BY NONRENEWAL
§6:20 Introduction
§6:20.10 Insurer’s refusal to renew
§6:20.20 Restrictions on insurer’s right
§6:20.30 No bad faith for refusal to renew
§6:20.40 Notice requirements for nonrenewal
C. EXPIRATION OR LAPSE OF
THE INSURANCE POLICY
§6:30 Introduction
§6:30.10 Failure of insurer to send premium renewal notice
§6:30.20 Grace period for payment of renewal premiums
§6:30.30 Reinstatement of policy after lapse
§6:30.40 Insurer’s waiver of lapse
D. CANCELLATION BY THE
INSURED
§6:40 Introduction
§6:40.10 Cancellation authorized by policy
§6:40.20 Requirements for cancellation by insured
§6:40.30 No specific form of notice required
§6:40.40 Surrender of policy not usually required
§6:40.50 Insurer not required to return premium
§6:40.60 Cancellation during “cooling off” period
§6:40.70 Binders canceled flat
§6:40.80 Restrictions on right of insured to cancel
E. CANCELLATION BY THE
PREMIUM LENDER
§6:50 Introduction
§6:50.10 Notice requirements
§6:50.20 Lender not required to surrender policy
§6:50.30 Insured not required to sign cancellation notice personally
§6:50.40 Burden on lender to provide valid notice of cancellation
CHAPTER 7: REFORMATION & RESCISSION
A. REFORMATION OF THE INSURANCE POLICY
§7:10 Introduction
§7:10.10 Reformation operates retroactively
§7:10.20 For whom is reformation available?
§7:10.30 Time for seeking reformation
§7:10.40 Burden of proof
B. RESCISSION OF THE POLICY
BY THE INSURER
§7:20 Introduction
§7:20.10 Procedure for rescinding policy
§7:20.20 Legal proceedings to enforce rescission
§7:20.30 Effect of rescission
§7:20.40 Matters considered in assessing insurer’s right to rescind
§7:20.50 Grounds for rescission
§7:20.60 Limitations on rescission
§7:20.70 Procedure for rescinding a policy
§7:20.80 Mutual rescission
§7:20.90 Estoppel and waiver of right to rescind by insurer
§7:20.100 Bad faith considerations re: rescission
C. FORMS
CHAPTER 8: GENERAL PRINCIPLES OF THIRD
PARTY LIABILITY INSURANCE
A. DISTINCTION BETWEEN FIRST PARTY AND
THIRD PARTY INSURANCE
§8:10 First party and third party
insurance distinguished
B. LIABILITY INSURANCE IN
GENERAL
§8:20 Obligation of insurer
in third party liability claims
§8:20.10 The duty to defend
§8:20.20 The duty to indemnify
§8:20.30 Insuring clauses
§8:20.40 The “insured qualification”
§8:20.50 The “damages qualification”
§8:20.60 The “activity qualification”
C. CGL POLICIES
§8:30 CGL policies
§8:30.10 History of CGL policies
§8:30.20 Hazards covered in ISO policy
D. OCCURRENCE, CLAIMS-MADE
AND CLAIMS-MADE AND REPORTED
§8:40 Occurrence,
claims-made and claims-made and reported
§8:40.10 Occurrence policies
§8:40.20 “Claims-made” policies
§8:40.30 Claims-made and reported to insurer
§8:40.40 Insuring clause terminology
§8:40.50 Ownership of property not required for recovery
§8:40.60 No coverage for economic losses alone
E. POLICY LIMITS,
DEDUCTIBLES AND SELF-INSURED RETENTIONS
§8:50 Policy limits,
deductibles and self-insured retentions
§8:50.10 Policy limits
§8:50.20 Deductibles
§8:50.30 Self-insurance
F. EXCLUSIONS AND EXCEPTIONS
§8:60 Exclusions and
exceptions
§8:60.10 Policy interpretation
§8:60.20 Intentional injuries
G. WILLFUL OR INTENTIONAL
INJURY
§8:70 Nature of limitation
§8:70.10 “Willful” or “intentional” injury defined
H. CONCURRENT CAUSES
§8:80 Concurrent causes of
injury to third party
§8:80.10 Totally independent concurrent causes
§8:80.20 Dependent concurring cause
I. LEGAL OBLIGATION
REQUIREMENT
§8:90 Requirement of legal
obligation
§8:90.10 Obligation of insurer to pay legally obligated damages
§8:90.20 Insurer’s obligation to pay damages
J. CONDITIONS ON COVERAGE
§8:100 Conditions imposed
on coverage in insurance policies
§8:100.10 No-action clauses
§8:100.20 Notice and cooperation clauses
K. TRIGGER OF COVERAGE UNDER
LIABILITY INSURANCE POLICIES
§8:110 Trigger of coverage
explained
§8:110.10 Facts upon which trigger of coverage depends
§8:110.20 Trigger of coverage involving multiple insurance
L. WAIVER AND ESTOPPEL
§8:120 Waiver and estoppel
§8:120.10 Notice requirements
§8:120.20 Time limitations on suits
§8:120.30 Estoppel to deny coverage
§8:120.40 Practice point
M. FORMS
CHAPTER 9: DUTY TO DEFEND
A. INTRODUCTION TO THE DUTY TO DEFEND
§9:10 Duty to defend and
duty to indemnify
§9:10.10 Duty to defend distinguished from duty to indemnify
§9:10.20 Rationale for duty to defend
§9:10.30 Basis for duty to defend
§9:10.40 Duty to defend may be implied by statute
B. THE LANGUAGE OF THE
INSURANCE POLICY
§9:20 Language of the
insurance policy in general
§9:20.10 Duty to defend language in general liability policies
§9:20.20 Duty to defend language in a commercial general liability policy
§9:20.30 Duty to defend in directors’ and officers’ liability insurance
policies
C. DETERMINING WHETHER THERE IS A DUTY TO DEFEND
§9:30 Is there a duty to defend?
§9:30.10 Duty to defend based on facts at inception of lawsuit
§9:30.20 Duty to defend is created by the potential for coverage
D. SCOPE OF DUTY TO DEFEND
§9:40 How broad is the duty to defend?
§9:40.10 It does not matter that a non-covered claim is primary
§9:40.20 Effect of multiple insurers
§9:40.30 Duration of duty to defend
§9:40.40 Limitations on duty to defend
§9:40.50 Reimbursement of costs on non-covered claims
§9:40.60 Duty to fund costs of defense
§9:40.70 Duty to remain informed of case developments
§9:40.80 Duty to appeal
§9:40.90 Duty to provide competent counsel
§9:40.100 Compare: Insurer not liable for negligence of defense counsel
§9:40.110 Duties necessary to a proper defense
E. TIME AT WHICH DUTY TO DEFEND ARISES
§9:50 When does duty arise?
§9:50.10 Circumstances where duty to defend is created by tender
§9:50.20 Environmental liability insurance policies
§9:50.30 Insurer may choose to intervene before suit filed
§9:50.40 No duty unless policy is in effect
§9:50.50 No duty unless insured
§9:50.60 Duty to defend not triggered unless notice is given by insured
F. MULTIPLE INSURERS ON RISK
§9:60.10 Responsibility of multiple insurers
§9:60.20 Duty to defend of a primary insurer and an excess insurer
§9:60.30 Excess insurer contributes upon exhaustion of primary policy
§9:60.40 Self-insured retention
§9:60.50 Excess insurer may be required to share in defense costs
§9:60.60 Duty to defend when there is a reinsurer
G. DEFENDING UNDER RESERVATION OF RIGHTS
§9:70 Rationale of defending under reservation of rights
§9:70.10 Failure to defend under reservation of rights
§9:70.20 Requirements for estoppel or waiver
§9:70.30 Burden of proof
§9:70.40 Evidence of detrimental reliance
§9:70.50 Consequence of defending under reservation of rights
§9:70.60 When should rights be reserved?
§9:70.70 Form and notice requirements for reservation of rights
§9:70.80 Reimbursement of defense costs
§9:70.90 Reimbursement of settlement payments
H. DUTY OF INSURER TO PROVIDE INDEPENDENT COUNSEL
§9:80 Duty to provide independent counsel generally
§9:80.10 Conflicts of interest in representing the insured
§9:80.20 Conflicts of interest that require independent counsel
§9:80.30 Situations where Cumis (independent) counsel is not required
§9:80.40 How is independent counsel selected?
§9:80.50 Duty to pay independent counsel
§9:80.60 Insured’s recourse for failure to appoint independent counsel
§9:80.70 Responsibilities of Cumis counsel
§9:80.80 Responsibility of claims adjuster
I. RESPONSIBILITIES OF DEFENSE COUNSEL
§9:90 Responsibilities of defense counsel generally
§9:90.10 Defense attorney owes duty to insurer and insured
§9:90.20 Compare: Cumis counsel represents insured not insurer
§9:90.30 Defense counsel’s duty to the insurer
§9:90.40 Duty of confidentiality to insured and insurer
§9:90.50 Duty to avoid conflict of interest
J. INSURER’S RISKS IN ACCEPTING OR DENYING A DEFENSE
§9:100 Risks for insurer in accepting or denying a defense
§9:100.10 Consequence of unconditionally accepting defense
§9:100.20 Consequences of refusing to defend a claim
§9:100.30 Options for insurer facing a coverage question
K. TERMINATION OF DUTY TO DEFEND
§9:110 Termination of the duty to defend
§9:110.10 Justifiable withdrawal of defense by insurer
§9:110.20 Unjustifiable withdrawal by insurer
§9:110.30 Effect of agreement not to withdraw
§9:110.40 Termination of duty to defend by court determination
L. DAMAGES FOR INSURER’S BREACH OF DUTY TO DEFEND
§9:120 Damages based on contract or tort
§9:120.10 Breach of contract as theory of liability
§9:120.20 Damages in tort
M. STATUTE OF LIMITATIONS ON ACTIONS BY INSURED AGAINST INSURER
§9:130 Insured’s statute of limitations for bringing action against the
insurer
§9:130.10 4-year statute of limitations where based upon contract
§9:130.20 2-year statute of limitations for torts
§9:130.30 2-year statute of limitations for actions on title insurance
policies
§9:130.40 Time of accrual of action
N. INSURED’S DUTY TO INSURER
§9:140 Duties of insured to insurer
§9:140.10 Duty to notify insurer of claim
§9:140.20 Duty to cooperate in defense
§9:140.30 Duty to refrain from making voluntary payments
§9:140.40 Duty to refrain from prejudicing insurer’s right of subrogation
O. FORMS
Form 9:1 Notice to Insurer of Actual Claim (tender letter) Under
Liability Insurance Policy (modify letter for particular policy)
Form 9:2 Letter Accepting Tender Under Reservation of Rights Due to
Intentional Act
Form 9:3 Sample Waiver of Potential Conflict Letter From Attorney to Client
Form 9:4 Sample Notice to Client of Actual Conflict and Intent to Withdraw
Form 9:5 Sample Motion for Leave to Withdraw as Attorney Due to Conflict
Form 9:6 Sample Notice by Insurer of Intent to Withdraw due to No Potential
for Coverage
Form 9:7 Sample Notice by Insurer to Insured of Withdrawal due to
Non-cooperation of Insured
Form 9:8 Sample Cause of Action for Declaratory Relief by Insurer
Form 9:9 Sample Cause of Action for Declaratory Relief by Insured
Form 9:10 Notice to Insurer of Potential Claim Under Liability Policy
Form 9:11 Sample Letter Accepting Tender, Warning of Potential Excess
Exposure
Form 9:12 Sample Letter Denying Coverage
CHAPTER 10: AUTOMOBILE LIABILITY
INSURANCE
A. INTRODUCTION TO AUTOMOBILE LIABILITY
INSURANCE
§10:10 Introduction
§10:10.10 Statutorily imposed obligations
B. PERMISSIBLE EXCLUSIONS
§10:20 Nature and validity of exclusions
§10:20.10 Insurance Code regulation of exclusions
§10:20.20 Exclusions permitted by law
§10:20.30 Claims between family members
C. INVALID EXCLUSIONS
§10:30 Insurance Code §11580.1
§10:30.10 No exclusion for operator under influence of alcohol
§10:30.20 Additional exclusions available for extended coverage
§10:30.30 Additional permissible exclusions in excess policies
§10:30.40 Automobile liability v. motor vehicle liability insurance
§10:30.50 Rental car agreements
§10:30.60 Highway carriers
D. LIABILITY BASED ON OWNERSHIP, MAINTENANCE OR USE OF VEHICLE
§10:40 Introduction
§10:40.10 Specific provisions and interpretation
§10:40.20 Vehicle insured under policy
E. PERMISSIVE USE LIABILITY
§10:50 Statutory imposition of vicarious liability for permissive use
§10:50.10 Limits on liability for permissive use
§10:50.20 Rationale for statutorily imposed liability for permissive use
§10:50.30 Permissive use by bailees
§10:50.40 Requirement of ownership
§10:50.50 Express or implied permissive use
§10:50.60 Owner and permissive user as joint tortfeasors
§10:50.70 Omnibus coverage for permissive users under owner’s policy
F. NEGLIGENT ENTRUSTMENT
§10:60 General principles
§10:60.10 Statutory basis for negligent entrustment
§10:60.20 Liability for minor driver
§10:60.30 Common law liability based on negligent entrustment
G. LIMITATION ON INSURER’S RIGHT TO CANCEL OR RESCIND POLICY
§10:70 Statutory limitations
§10:70.10 Limitation on the insurer’s right to cancel or refuse to renew a
policy
§10:70.20 Insurer’s duty to investigate insurability
H. FORMS
Form 10:1 Sample Notice of Cancellation of Automobile Liability
Insurance Policy
Form 10:2 Policy Reinstatement Notice
Form 10:3 Offer to Renew Policy of Insurance
Form 10:4 Insured’s Request for Premium History and Loss History
Form 10:10 Sample Demand Letter for Automobile Liability Claim
Form 10:11 Sample Request for Production to Defendant Insurer in Coverage
Dispute under Automobile Liability Policy
Form 10:12 Sample Special Interrogatories Propounded to Insurer in Coverage
Dispute under Automobile Liability Policy
Form 10:13 Sample Requests for Admission Propounded to Insurer in Coverage
Dispute under Automobile Liability Policy
Form 10:14 Sample Interrogatories to Insurer from Insured in Bad Faith
Action under Third Party Claim
Form 10:15 Sample Special Interrogatories to Insured from Insurer in
Coverage Dispute under a Third Party Claim
CHAPTER 11: ADVERTISING INJURY LIABILITY
& PERSONAL INJURY LIABILITY
A. GENERAL CONSIDERATIONS
§11:10 Standard advertising injury/personal injury liability policies
§11:10.10 History of combined advertising/personal injury liability policies
§11:10.20 CGL bodily injury and property damage coverages
§11:10.30 Policy limits
§11:10.40 Trigger of coverage
§11:10.50 Available relief
§11:10.60 Policy exclusions
§11:10.70 Reasonable expectations of insured
B. PERSONAL INJURY LIABILITY
§11:20.10 Introduction
C. ADVERTISING INJURY LIABILITY
§11:30 Introduction
§11:30.10 Nature of advertising injury offenses
§11:30.20 Example of offenses
§11:30.30 Requirement of advertising activity
§11:30.40 Causation requirement
§11:30.50 Exclusions in advertising injury liability coverage
D. FORMS
Form 11:9 Sample Special Interrogatories to Insurer in Third Party Bad
Faith Claim
Form 11:10 Sample Requests for Admission
Form 11:11 Sample Request for Production of Documents
CHAPTER 12: HOMEOWNERS’ LIABILITY
INSURANCE
A. COVERAGES UNDER HOMEOWNERS’ POLICY
§12:10 Types of coverages under homeowners’ liability policy
§12:10.10 Practice point
B. COMPREHENSIVE PERSONAL LIABILITY INSURANCE
§12:20 Comprehensive personal liability insurance
§12:20.10 Insuring clause
§12:20.20 Common exclusions in personal liability insurance (homeowners’)
§12:20.30 Statutory exclusions
§12:20.40 Exclusion for professional services
§12:20.50 Exclusion for criminal acts of the insured
§12:20.60 Exclusion for illegal acts
§12:20.70 Exclusion for illegal drugs
§12:20.80 Exclusion for communicable diseases
§12:20.90 Sexual molestation, corporal punishment and abuse
§12:20.100 Exclusion for automobiles, aircraft and watercraft
§12:20.110 Residence or premises exclusion
§12:20.120 Exclusion for “resident relative”
C. MEDICAL PAYMENTS TO OTHERS
§12:30 Medical payments in homeowners’ policies
§12:30.10 Application of insuring clause
§12:30.20 Limits of liability
§12:30.30 Exclusions
§12:30.40 Medical payments as first party of coverage
§12:30.50 Injuries not on insured premises
D. WORKERS’ COMPENSATION AND EMPLOYERS’ LIABILITY COVERAGE FOR
RESIDENTIAL EMPLOYEES
§12:40 Workers’ compensation and employers’ liability insurance
§12:40.10 Workers’ compensation insurance required in certain policies
§12:40.20 Employers’ liability
E. FORMS
Form 12:9 Sample Special Interrogatories to Insurer in Third Party Bad
Faith Claim
Form 12:10 Sample Requests for Admission
Form 12:11 Sample Request for Production of Documents
CHAPTER 13: CONSTRUCTION LIABILITY
INSURANCE
A. TYPES OF CONSTRUCTION LIABILITY
INSURANCE POLICIES
§13:10 Introduction
§13:10.10 Types of liability policies
B. COMMON FEATURES OF CONSTRUCTION LIABILITY POLICIES
§13:20 Introduction
§13:20.10 Additional named insured
C. COMPREHENSIVE COMMERCIAL LIABILITY (CGL) POLICIES
§13:30 Introduction
§13:30.10 Insuring clause
§13:30.20 Policy definitions
§13:30.30 Trigger of coverage (occurrence policy)
§13:30.40 Policy limits
§13:30.50 Common exclusions found in form CGL policies
§13:30.60 Exclusions for delay or failure to perform
D. ARCHITECTS AND ENGINEERS’ PROFESSIONAL LIABILITY INSURANCE
§13:40 Introduction
§13:40.10 General considerations
§13:40.20 Common exclusions
E. SURETY BONDS
§13:50 Introduction
§13:10.10 Payment bonds
§13:10.20 Performance bonds
F. FORMS
Form 13:7 Sample Requests for Admission to Defendant Insurer
Form 13:8 Sample Demand for Inspection to Insurer
Form 13:9 Sample Special Interrogatories to Insurer in Coverage Dispute
CHAPTER 14: DIRECTORS’ & OFFICERS’
LIABILITY INSURANCE
A. GENERAL PRINCIPLES
§14:10 General principles of directors’ and officers’ liability insurance
§14:10.10 CGL and D&O liability distinguished
B. PROVISIONS OF POLICY
§14:20 The insuring clause
§14:20.10 Directors’ and officers’ liability coverage
§14:20.20 Corporate reimbursement coverage
§14:20.30 Claims-made policies
§14:20.40 Duty to reimburse defense cost
§14:20.50 Policy definitions
§14:20.60 Organizations qualifying as insured
§14:20.70 Policy limits of D&O policy
§14:20.80 Deductibles and self-insured retentions
§14:20.90 Exclusions
C. APPORTIONMENT OF DEFENSE AND SETTLEMENT COSTS
§14:30 General principles
§14:30.10 Allocation required between defense and settlement costs
§14:30.20 Apportionment/allocation of defense costs
§14:30.30 Apportionment/allocation of settlement costs
§14:30.40 Burden of proof regarding allocation of settlement and defense
costs
§14:30.50 Considerations in allocation
D. REMEDIES FOR MISREPRESENTATION IN APPLICATION PROCESS
§14:40 Misrepresentation in application for insurance
§14:40.10 Rescission and reformation
§14:40.20 Innocent co-insureds
E. FORMS
Form 14:7 Sample Requests for Admission to Defendant Insurer
Form 14:8 Sample Demand for Inspection to Insurer
Form 14:9 Sample Special Interrogatories to Insurer in Coverage Dispute
CHAPTER 15: PROFESSIONAL LIABILITY
INSURANCE
A. GENERAL PRINCIPLES OF PROFESSIONAL
LIABILITY INSURANCE
§15:10 Introduction
§15:10.10 Insuring provisions
B. STATUTORY PROVISIONS
§15:20 Introduction
§15:20.10 Misrepresentation in application
§15:20.20 Notice requirement re: claims-made policy
§15:20.30 Exclusion of pending claims
C. PROFESSIONAL LIABILITY POLICY PROVISIONS
§15:30 Introduction
§15:30.10 Statutory requirements for claims-made policies
§15:30.20 Declarations page
§15:30.30 Insuring clause
§15:30.40 Insuring clause re: professional services
§15:30.50 Insured’s responsibilities
§15:30.60 Obligations of insurer
§15:30.70 Exclusions
D. PROFESSIONAL LIABILITY POLICIES OF PARTICULAR PROFESSIONS
§15:40 General principles
§15:40.10 Common definitions in attorneys’ professional liability policies
§15:40.20 Medical professionals
§15:40.30 Accountants
§15:40.40 Architects and engineers
§15:40.50 Fiduciaries
§15:40.60 Real estate agents and brokers
§15:40.70 Insurance agents and brokers
§15:40.80 Media professionals
E. FORMS
Form 15:7 Sample Requests for Admission to Defendant Insurer
Form 15:8 Sample Demand for Inspection to Insurer
Form 15:9 Sample Special Interrogatories to Insurer in Coverage Dispute
CHAPTER 16: PRODUCT LIABILITY
A. GENERAL PRINCIPLES OF PRODUCT
LIABILITY COVERAGE
§16:10 General principles of product liability coverage
§16:10.10 Products liability coverage provisions
B. EXCLUSIONS
§16:20 Typical exclusions
§16:20.10 Exclusions for employees
C. PRODUCTS HAZARD AND COMPLETED OPERATIONS HAZARD
§16:30 Products hazard and completed operations hazards
§16:30.10 Products hazard
§16:30.20 “Completed Operations Hazard”
D. TRIGGER OF COVERAGE
§16:40 Trigger of coverage under occurrence policies
§16:40.10 Trigger of coverage explained
§16:40.20 Trigger of coverage involving multiple insurance
E. SUCCESSOR LIABILITY
§16:50 Successor in interest
§16:50.10 Successor tort liability
§16:50.20 Predecessor insurance does not cover successor liability
§16:50.30 Assignment of manufacturer’s policy to purchaser
F. VENDORS’ ENDORSEMENTS
§16:60 Vendors’ endorsements
§16:60.10 Broad form endorsement
§16:60.20 Limited form endorsement
G. FORMS
Form 16:7 Sample Requests for Admission to Defendant Insurer
Form 16:8 Sample Demand for Inspection to Insurer
Form 16:9 Sample Special Interrogatories to Insurer in Coverage Dispute
CHAPTER 17: EMPLOYMENT LIABILITY
INSURANCE
A. INTRODUCTION
§17:10 Employment liability coverage
§17:10.10 Type of insurance policies under which coverage may exist
§17:10.20 Intentional injury exclusion (Insurance Code §533)
§17:10.30 Bar on indemnification for punitive damages
§17:10.40 Primary vs. excess coverage
B. EMPLOYMENT PRACTICES LIABILITY (EPL) INSURANCE
§17:20 General principles of employment practices liability (EPL)
insurance
§17:20.10 Insuring clause
§17:20.20 Insured individuals
§17:20.30 Intentional injuries
§17:20.40 Additional exclusions
§17:20.50 Conditions in EPL policies
§17:20.60 Practice tips
C. WORKERS’ COMPENSATION COVERAGE
§17:30 General principles of workers’ compensation insurance
§17:30.10 Workers’ compensation exclusive remedy
§17:30.20 Intentional injuries
§17:30.30 Injuries resulting from employment termination
§17:30.40 Insurer’s duty to defend WCAB claims
§17:30.50 Penalties and additional recovery
§17:30.60 Court actions against workers’ compensation carriers
D. EMPLOYERS’ LIABILITY (EL) INSURANCE
§17:40 General principles of employers’ liability (EL) insurance
§17:40.10 Exclusion for benefits payable under workers’ compensation law
§17:40.20 Coverage provisions
§17:40.30 Exclusions
E. COMMERCIAL GENERAL LIABILITY (CGL) INSURANCE
§17:50 CGL policies and employers’ liability coverage
§17:50.10 Insuring provisions
§17:50.20 Exclusions
§17:50.30 Coverage issues
§17:50.40 Sexual harassment claims
§17:50.50 Employment discrimination
§17:50.60 Personal injury liability coverage
§17:50.70 ERISA claims
F. PROFESSIONAL LIABILITY (E&O) COVERAGE
§17:60 General principles
§17:60.10 E&O coverage for claims arising out of employment
§17:60.20 Exclusions
G. DIRECTORS’ AND OFFICERS’ LIABILITY COVERAGE
§17:70 General principles of D&O coverage
§17:70.10 Employment-related claims
§17:70.20 Exclusions
§17:70.30 Allocation of defense and settlement costs
H. HOMEOWNERS’ LIABILITY INSURANCE
§17:80 Homeowners’ liability insurance in the context of employment
§17:80.10 Wrongful termination
§17:80.20 Sexual harassment
§17:80.30 Practice tip
I. FORMS
Form 17:7 Sample Requests for Admission to Defendant Insurer
Form 17:8 Sample Demand for Inspection to Insurer
Form 17:9 Sample Special Interrogatories to Insurer in Coverage Dispute
CHAPTER 18: ENVIRONMENTAL LIABILITY
A. GENERAL PRINCIPLES OF ENVIRONMENTAL
LIABILITY LAW
§18:10 Environmental liability insurance
§18:10.10 Federal legislation
§18:10.20 State legislation
§18:10.30 Common law theories of liability
§18:10.40 Recovery and enforcement
B. TYPES OF POLICIES UNDER WHICH THERE MAY BE COVERAGE FOR ENVIRONMENTAL
POLLUTION
§18:20 Types of policies that may provide coverage for environmental
pollution
§18:20.10 Comprehensive general liability (CGL) policy
§18:20.20 Claims-made CGL policy
§18:20.30 Environmental impairment liability (EIL) policy
§18:20.40 ISO Comprehensive Environmental Impact policy
§18:20.50 Underground storage tank (UST) policy
C. INSURING CLAUSE IN CGL POLICIES
§18:30 Insuring clause
§18:30.10 Policy terminology
D. TRIGGER OF COVERAGE
§18:40 Trigger of coverage
§18:40.10 Significant issues in environmental law and trigger of coverage
§18:40.20 Basis must be during policy period
E. EXCLUSIONS
§18:50 Exclusions in CGL policies
§18:50.10 Pollution exclusion
§18:50.20 Owned property exclusion
§18:50.30 Willful acts exclusion
F. DUTY TO DEFEND
§18:60 Duty to defend
§18:60.10 Discretionary right vs. duty to defend
§18:60.20 Allocation of defense costs in mixed actions
G. CHOICE OF FORUM
§18.70 Choice of forum in environmental liability
H. FORMS
Form 18:7 Sample Requests for Admission to Defendant Insurer
Form 18:8 Sample Demand for Inspection to Insurer
Form 18:9 Sample Special Interrogatories to Insurer in Coverage Dispute
CHAPTER 19: THE CLAIMS HANDLING PROCESS
A. STRUCTURE OF CLAIMS DEPARTMENTS
§19:10 Claims department personnel
§19:10.10 Managers
§19:10.20 Technicians
§19:10.30 Clerical and administrative staff
§19:10.40 House counsel
B. CLAIMS UNITS
§19:20 Various units in a claims department
§19:20.10 Claims unit
§19:20.20 Litigation unit
§19:20.30 Extra-contractual unit
§19:20.40 Subrogation unit
§19:20.50 Fraud unit
C. OUTSIDE PERSONNEL
§19:30 Outside personnel
§19:30.10 Independent adjusters
§19:30.20 Independent consultants
§19:30.30 Outside legal counsel
D. PROCESSING THE CLAIM
§19:40 Processing the claim
§19:40.10 Initial intake and claim report
§19:40.20 Assignment of claim
§19:40.30 Processing by clerical staff
§19:40.40 Claim investigation
§19:40.50 Setting reserves
§19:40.60 Documentation and reporting
§19:40.70 Settlement or referral to counsel
E. SUBMITTING THE CLAIM
§19:50 Submitting the claim to the insurer
§19:50.10 Meeting with client
§19:50.20 Presenting the claim
F. RESPONDING TO CLAIM SUBMITTED BY THE CLAIMANT OR HIS ATTORNEY
§19:60 Responding to a claim
§19:60.10 Denying a claim
§19:60.20 Defending under reservation of rights
§19:60.30 When possibility of judgment in excess of policy limits
§19:60.40 Where there is a conflict between insurer and the insured
§19:60.50 When unconditionally accepting defense
G. TENDERING DEFENSE
§19:70 Tendering defense
§19:70.10 Obtain all information from client pertaining to claim
§19:70.20 Investigate underlying facts
§19:70.30 Carefully examine all policies of insurance
§19:70.40 Determine notice requirements under each policy of insurance
§19:70.50 Notify the insurer of the claim
H. RESPONDING TO TENDER LETTER
§19:80 Responding to tender letter
§19:80.10 Determining whether to defend
§19:80.20 Accepting tender and defending without reservation of rights
§19:80.30 Defending under reservation of rights
CHAPTER 20: INSOLVENCY OF INSURERS
A. INSURER INSOLVENCY PROCEEDINGS
§20:10 Insolvency proceedings (conservatorship and liquidation)
§20:10.10 Commissioner’s application
§20:10.20 Conservation proceedings
§20:10.30 Liquidation proceedings
§20:10.40 Orders necessary for conservatorship or liquidation
§20:10.50 Claims during liquidation
§20:10.60 Uniform Insurers Rehabilitation Act/Uniform Liquidation Act
B. CALIFORNIA INSURANCE GUARANTEE ASSOCIATION
§20:20 California Insurance Guarantee Association (CIGA)
§20:20.10 Method of operation
C. CALIFORNIA HEALTH AND LIFE INSURANCE GUARANTEE ASSOCIATION (CHLIGA)
§20:30 Origin, purpose and structure of CHLIGA
§20:30.10 Purpose of CHLIGA
§20:30.20 Member insurers
§20:30.30 Covered claims
§20:30.40 Benefit limitations
§20:30.50 Excluded claims
D. ADDITIONAL PROCEDURES FOR INSURER INSOLVENCY
§20:40 Other remedies for insurer insolvency
§20:40.10 Claims against uninsured motorist coverage
§20:40.20 Claims against excess insurance
§20:40.30 Claims against reinsurance
§20:40.40 Claims against insurance brokers
§20:40.50 Surplus Lines Association (SLA)
§20:40.60 Directors and officers of insolvent insurer
E. FORM
Form 20:1 Sample Tender Letter to CIGA from Attorney for Plaintiff where
Defendant’s Insurer is Insolvent
CHAPTER 21: SUBROGATION
A. GENERAL PRINCIPLES OF SUBROGATION
§21:10 General principles of subrogation
§21:10.10 Rights and liabilities of insurer
§21:10.20 Statute of limitations
§21:10.30 Subrogation distinguished from indemnity and contribution
§21:10.40 Subrogation by excess carrier where primary refuses defense
§21:10.50 Authority for doctrine of subrogation
B. FORMS OF SUBROGATION
§21:20 Forms of subrogation
§21:20.10 Effect of subrogation
§21:20.20 Collateral source rule
§21:20.30 Equitable subrogation
C. RECOVERABLE DAMAGES
§21:30 Amount of damages recoverable in subrogation action
§21:30.10 Amount paid to the insured is amount recoverable
§21:30.20 Attorney’s fees
§21:30.30 Prejudgment interest
§21:30.40 Effect of deductibles, policy limits and exclusions
D. INSURED’S FAILURE TO COOPERATE IN INSURER’S SUBROGATION
§21:40 Insured’s failure to cooperate in insurer’s subrogation
§21:40.10 Insured’s release of tortfeasor without insurer’s consent
E. DEFENSES TO SUBROGATION ACTION
§21:50 Defenses to action for subrogation
§21:50.10 Defenses that may be raised against insured
§21:50.20 Insurer may not subrogate against its own insured
§21:50.30 Waiver of subrogation
§21:50.40 Insolvency of insurer of tortfeasor
§21:50.50 Statute of limitations on subrogation action
F. FORM
CHAPTER 22: MULTIPLE INSURERS COVERING
RISK
A. GENERAL CONSIDERATIONS WHERE MULTIPLE
INSURERS COVER THE SAME CLAIM
§22:10 Multiple insurers covering claim
§22:10.10 Double recovery
§22:10.20 Other insurance
B. RECOURSE BETWEEN INSURERS
§22:20 Recourse between insurers
§22:20.10 Equitable contribution
§22:20.20 Insurer’s defenses to contribution and indemnification
C. PRIMARY AND EXCESS COVERAGE
§22:30 Primary and excess coverage
§22:30.10 Significance of distinction between primary and excess
§22:30.20 Levels of coverage
§22:30.30 Scope of excess coverage
§22:30.40 Interaction of excess and primary coverage
§22:30.50 Insolvency of primary insurer
§22:30.60 Issues as to defense of underlying claims
§22:30.70 Conflicting interests of primary and excess against tortfeasor
D. COMMON ISSUES BETWEEN PRIMARY INSURERS AND REINSURERS
§22:40 General principles of reinsurance
§22:40.10 Types of reinsurance
§22:40.20 No affect on primary insurer’s obligations to insured
§22:40.30 Insured has no right to reinsurance proceeds
§22:40.40 Liability of reinsurer to primary insurer
§22:40.50 Insolvency of primary insurer
CHAPTER 23: EXTRACONTRACTUAL LIABILITY
A. GENERAL PRINCIPLES OF
EXTRACONTRACTUAL LIABILITY
§23:10 Extracontractual liability
§23:10.10 Measure of damages
§23:10.20 Theories of extracontractual liability
§23:10.30 Breach of Implied Covenant of Good Faith and Fair Dealing
§23:10.40 Fraud
§23:10.50 Negligent misrepresentation
§23:10.60 Intentional infliction of emotional distress
§23:10.70 Negligent infliction of emotional distress
§23:10.80 Intentional interference with contract or economic advantage
§23:10.90 Conspiracy
§23:10.100 Breach of fiduciary duty
B. OVERVIEW OF OTHER TORTS AGAINST THE INSURER
§23:20 Overview of other torts against the insurer
§23:20.10 Spoliation of evidence
§23:20.20 Malicious prosecution
§23:20.30 Invasion of privacy
§23:20.40 Defamation
§23:20.50 Negligence
§23:20.60 Assault and battery
§23:20.70 Trespass
§23:20.80 Vicarious liability
C. LIABILITY IMPOSED BY STATUTE
§23:30 Statutory liability
§23:30.10 Unfair Competition Act (Business and Professions Code §17200)
§23:30.20 RICO
§23:30.30 Unfair Insurance Practices Act (Insurance Code §790.03)
§23:30.40 Unruh Civil Rights Act
§23:30.50 Liability of HMO’s for failure to comply with statutes
§23:30.60 Americans with Disabilities Act (ADA)
§23:30.70 Earthquake Insurance Act
§23:30.80 Sales of insurance to senior citizens
§23:30.90 Insurance for victims of domestic violence
§23:30.100 ERISA actions for breach of fiduciary duty
§23:30.110 National Flood Insurance Act
D. FORMS
Form 23:4 Sample Complaint for Damages based on Action for Intentional
Infliction of Emotional Distress
Form 23:5 Sample Cause of Action for Intentional Interference with Contract
or Prospective Economic Advantage
CHAPTER 24: GENERAL PRINCIPLES OF
INSURANCE BAD FAITH
A. GENERAL PRINCIPLES OF INSURANCE BAD
FAITH
§24:10 Introduction
§24:10.10 Nature of liability and damages
§24:10.20 First party bad faith actions
§24:10.30 Third party bad faith actions
B. BRIEF HISTORY OF INSURANCE BAD FAITH
§24:20 Development of insurance bad faith
§24:20.10 Early cases
§24:20.20 Application of tort law to first party cases
§24:20.30 Punitive damages
§24:20.40 Liability arising from statutory violations
C. DETERMINING WHETHER THERE IS A BAD FAITH ACTION
§24:30 Elements of insurance bad faith
§24:30.10 General principles of covenant of good faith and fair dealing
§24:30.20 Duties under implied covenant
§24:30.30 Considerations in assessing bad faith
§24:30.40 Contractual obligation necessary for finding of bad faith
D. STANDING TO SUE
§24:40 Requirement of standing
§24:40.10 Privity of contract required
§24:40.20 Designated beneficiary
§24:40.30 Joint insureds
§24:40.40 No privity of contract
E. PROPER DEFENDANTS
§24:50 Determining proper defendants
§24:50.10 Requirement of privity
F. INSURED’S BAD FAITH
§24:60 Bad faith conduct by insured
§24:60.10 Double edged sword of insurance bad faith
CHAPTER 25: INSURER BAD FAITH ACTIONS
ARISING UNDER LIABILITY INSURANCE POLICIES (THIRD PARTY BAD FAITH)
A. GENERAL PRINCIPLES OF THIRD PARTY BAD
FAITH
§25:10 Distinction between first party and third party bad faith actions
§25:10.10 Types of third party bad faith actions
§25:10.20 Distinction between contractual and extracontractual liability
B. BAD FAITH REFUSAL TO DEFEND
§25:20 Bad faith refusal to defend
§25:20.10 Duty arises where there is a mere potential for coverage
§25:20.20 Required showing for action based on breach of duty to defend
§25:20.30 Practice tip: Insurer’s options in coverage disputes
§25:20.40 Insured’s rights and duties after insurer’s refusal to defend
§25:20.50 Recoverable damages where insurer wrongfully refuses to defend
§25:20.60 Considerations in determining damages for refusal to defend
C. BAD FAITH REFUSAL TO SETTLE
§25:30 Bad faith refusal to settle
§25:30.10 Breach of implied covenant of good faith by refusing to settle
D. BAD FAITH LIABILITY EVEN WHERE THE INSURER SETTLES
§25:40 Bad faith liability despite settlement by insurer
§25:40.10 Delay in settling claim that damages the insured
§25:40.20 Coercing insured to participate in settlement
§25:40.30 Where settlement terms damage the insured
§25:40.40 No liability for using insured’s deductible in settlement
§25:40.50 Settlement reducing available coverage for other claims
§25:40.60 Settlement prejudices insured’s rights against third party
§25:40.70 Workers’ compensation insurer’s unreasonable reserves or
settlements
E. FORMS
Form 25:1 Sample Policy Limits Demand Letter to Insurer from Attorney
for Claimant
Form 25:2 Sample Demand Letter to Insurer for Breach of Implied Covenant of
Good Faith and Fair Dealing in Third Party Claim
Form 25:5 Sample Interrogatories to Insurer in Bad Faith Action (Third
Party)
Form 25:6 Sample Request for Admission to Insurer in Bad Faith Action (Third
Party)
Form 25.7 Sample Demand for Inspection/Production to Insurer
CHAPTER 26: OVERVIEW OF FIRST PARTY
COVERAGE
A. GENERAL PRINCIPLES OF FIRST PARTY
INSURANCE
§26:10 Distinction between first party and third party coverage
§26:10.10 Types of first party coverage
§26:10.20 Conditions of coverage
B. INSURER’S FORFEITURE, WAIVER AND ESTOPPEL OF DEFENSES
§26:20 Forfeiture, waiver and estoppel
§26:20.10 Forfeiture, waiver and estoppel
§26:20.20 Notice and proof of loss waiver
§26:20.30 Defenses not waived by denial of coverage on other grounds
§26:20.40 Waiver of time for filing suit
§26:20.50 Estoppel from asserting limitations on time to sue
C. TRIGGER OF COVERAGE
§26:30 Trigger of coverage
§26:30.10 Trigger of coverage
D. CONCURRENT CAUSES
§26:40 Concurrent Causes
§26:40.10 Statutory standards
§26:40.20 Efficient proximate cause standard
§26:40.30 Excluded peril
§26:40.40 Policy provisions
E. POLICY LIMITS AND DEDUCTIBLES
§26:50 Application of policy limits and deductibles
§26:50.10 Application of policy limits and deductibles
F. FORM
Form 26:1 Notice to Insurer of Actual Claim under First Party Insurance
Policy (modify letter for particular policy)
CHAPTER 27: SPECIFIC FIRST PARTY
COVERAGES
A. PROPERTY INSURANCE
§27:10 Property insurance
§27:10.10 Nature of property insurance
§27:10.20 Insurable interest
§27:10.30 Insuring clause
§27:10.40 Definitions
§27:10.50 Trigger of coverage
§27:10.60 Exclusions
B. AUTOMOBILE INSURANCE
§27:20 Automobile Insurance
§27:20.10 First party automobile insurance
§27:20.20 Coverage for property losses
§27:20.30 Medical payments coverage
§27:20.40 Uninsured and underinsured motorist coverage
C. DISABILITY INSURANCE
§27:30 Disability Insurance
§27:30.10 Disability insurance generally
§27:30.20 Coverage provisions
§27:30.30 Statutory conditions
D. LIFE INSURANCE
§27:40 Life Insurance
§27:40.10 General principles of life insurance
§27:40.20 Accidental death insurance
§27:40.30 Exclusions
§27:40.40 Concurrent causes
§27:40.50 Burden of proof
E. HEALTH INSURANCE
§27:50 Health Insurance
§27:50.10 General principles of health insurance
§27:50.20 Coverage after first premium paid but before policy issued
§27:50.30 Conditions of coverage
§27:50.40 Limitations on coverage
§27:50.50 Exclusions
§27:50.60 Limitations on insurer’s termination of policy
§27:50.70 Procedures for resolving coverage disputes
F. SURETY BONDS
§27:60 Surety Bonds
§27:60.10 General principles of surety bonds
§27:60.20 The concept of surety
§27:60.30 Rights and obligation of surety where principal defaults
§27:60.40 Defenses assertable by surety
§27:60.50 Rights of surety upon payment of the bond
§27:60.60 Defenses against surety
G. TITLE INSURANCE
§27:70 Title Insurance
§27:70.10 Nature of title insurance
§27:70.20 Services provided by title insurance companies
§27:70.30 Title insurance policies
§27:70.40 Interpretation of title insurance policies
§27:70.50 Rights and duties of title insurer
§27:70.60 Damages obtainable against title insurers
§27:70.70 Notice and proof of loss
§27:70.80 Statute of Limitations
CHAPTER 28: OVERVIEW OF GROUP INSURANCE
A. GENERAL PRINCIPLES OF GROUP INSURANCE
§28:10 Forms of group insurance
§28:10.10 Conflicts between master policy and certificate
§28:10.20 Application for group insurance
§28:10.30 Where representations in brochure conflict with policy
§28:10.40 Statutory limits on exclusions for pre-existing conditions
§28:10.50 Statutory regulation of content of group policies
§28:10.60 Arbitration clauses
§28:10.70 Termination provisions
§28:10.80 Postclaims underwriting
§28:10.90 Third party liability clauses
B. ENROLLMENT AND ADMINISTRATION
§28:20.10 Third party administrators
C. POLICY RENEWAL, TERMINATION AND REPLACEMENT
§28:30 Policy renewal, termination and replacement
§28:30.10 Policy renewal
§28:30.20 Termination of group insurance policies
D. CONTINUATION OF HEALTH CARE COVERAGE AFTER TERMINATION
§28:40 Continuation of coverage after termination of employment
§28:40.10 COBRA
§28:40.20 Requirements imposed by state law
E. EMPLOYEE RETIREMENT INCOME SECURITY ACT (ERISA)
§28:50 ERISA
§28:50.10 Purpose and operation of ERISA
§28:50.20 Preemption by ERISA
F. FEDERAL PREEMPTION ON OTHER GROUNDS
§28:60 Other grounds for preemption of state insurance law
§28:60.10 Other grounds for federal preemption of group policies
G. FORMS
Form 28:1 Sample Letter Challenging Denial of Coverage for Failure to
Timely Elect COBRA
Form 28:2 Sample Cause of Action for Violation of ERISA
CHAPTER 29: FIRST PARTY BAD FAITH
A. GENERAL PRINCIPLES OF FIRST PARTY BAD
FAITH
§29:10 Introduction
§29:10.10 Distinction between first and third party bad faith
§29:10.20 Types of policies where first party bad faith might arise
B. GROUNDS FOR LIABILITY IN FIRST PARTY CLAIMS
§29:20 Introduction
§29:20.10 Insurer bad faith in first party claims
§29:20.20 Other tort theories of liability
§29:20.30 Statutory duties of insurer re: implied covenant of good faith
C. REQUIREMENTS FOR FIRST PARTY BAD FAITH ACTION
§29:30 Introduction
§29:30.10 Elements of first party bad faith action
§29:30.20 Withholding of benefits due insured under policy
D. REQUIRED PROOF
§29:40 Proof of insurer bad faith
§29:40.10 Evidence of improper motive on part of insurer
E. FORMS
Form 29.1 First Party Complaint for Breach of Implied Covenant of Good
Faith and Fair Dealing and Injunctive Relief
Form 29.2 Answer to Complaint
Form 29.3 Demand Letter to Insurer for Breach of Implied Covenant of Good
Faith and Fair Dealing
CHAPTER 30: INSURER DEFENSES TO BAD
FAITH ACTION
A. DEFENSES TO INSURANCE BAD FAITH
ACTIONS
§30:10 Defenses to bad faith actions
B. STANDING TO SUE
§30:20 Standing to sue
§30:20.10 Privity of contract required
§30:20.20 Designated beneficiary
§30:20.30 Joint insureds
§30:20.40 Where no privity of contract
C. PROPER DEFENDANTS
§30:30 Proper defendants
§30:30.10 Proper defendants in a bad faith action
D. STATUTORY PRIVILEGES
§30:40 Statutory privileges
E. FEDERAL PREEMPTION
§30:50 Nature of federal preemption in insurance law
§30:50.10 Group insurance policies and ERISA
§30:50.20 Preemption by Medicare
§30:50.30 National Flood Insurance Act
F. STATUTE OF LIMITATIONS IN BAD FAITH ACTIONS
§30:60 Statute of limitations in insurance litigation
§30:60.10 Statute of limitations under tort theory
G. POLICY PROVISIONS ON TIME TO SUE
§30:70 Policy limitations on the time to sue
§30:70.10 Application to bad faith actions
§30:70.20 When statute begins to run
H. CONDUCT OF INSURED CONTRIBUTING TO LOSS
§30:80 Conduct of insured contributing to loss
§30:80.10 Defenses based on insured’s breach of contract
§30:80.20 Fraud of insured as basis for rescinding contract
§30:80.30 Insured’s misconduct may negate bad faith of insurer
I. EXCLUSIVE REMEDY OF WORKERS’ COMPENSATION ACTION
§30:90 Exclusive remedy of workers’ compensation
§30:90.10 Practice tip
J. RELIANCE ON ADVICE OF COUNSEL
§30:100 Reliance on advice of counsel
§30:100.10 Reliance on counsel as defense to bad faith action
§30:100.20 Practice tip
K. ARBITRATION AGREEMENTS
§30:110 Arbitration agreements as bar to lawsuit by insured
§30:110.10 Effect on insurer
§30:110.20 Scope of arbitration provisions
§30:110.30 Challenges to arbitration provisions
L. RES JUDICATA AND COLLATERAL ESTOPPEL
§30:120 Res judicata and collateral estoppel as insurer’s defense to bad
faith claim
§30:120.10 Res judicata (claim preclusion)
§30:120.20 Collateral estoppel (issue preclusion)
M. SETTLEMENT AND RELEASE OF CLAIM
§30:130 Settlement and release of claim
§30:130.10 Parol evidence inadmissible to show no intent to release all
claims
§30:130.20 Different result where there is a release by a third party
§30:130.30 Insured’s possible challenges to release
§30:130.40 Insurance Regulations
§30:130.50 Settlement with one of several insurers
N. CIGA IMMUNITY FOR TORTS
§30:140 California Insurance Guarantee Association (CIGA)
§30:140.10 Method of operation
O. INSURER’S REPORTS TO WORKERS’ COMPENSATION RATING BUREAU
§30:150 Insurer’s reports to Workers’ Compensation Rating Bureau
P. INSURER’S ACTION NOT CONSTITUTING BAD FAITH
§30:160 Insurer’s actions not rising to the level of bad faith
Q. FORMS
Form 30:1 Sample Affirmative Defenses for Insurer in Bad Faith Action
Form 30:2 Sample Requests for Admission to Insurer by Insured under First
Party Coverage Dispute
Form 30:3 Sample Demand for Inspection to Insurer from Insured in Coverage
Dispute
CHAPTER 31: DAMAGES IN INSURANCE
LITIGATION
A. DAMAGES IN INSURANCE LITIGATION
§31:10 Damages in insurance litigation
§31:10.10 Damages arising from breach of contract
§31:10.20 Extracontractual damages
§31:10.30 Punitive damages
B. DAMAGES ARISING FROM BREACH OF CONTRACT
§31:20 Damages arising from breach of contract
§31:20.10 Statutory measure of damages
§31:20.20 Measure of damages under the terms of the policy
§31:20.30 Consequential damages
§31:20.40 Prejudgment interest
§31:20.50 Currency conversion rate
§31:20.60 Past inflation loss
§31:20.70 Attorney’s fees
§31:20.80 No punitive damages
C. MEASURE OF DAMAGES IN EXTRACONTRACTUAL CLAIMS
§31:30 Measure of extracontractual damages
§31:30.10 General principles of extracontractual damages
§31:30.20 Economic losses
§31:30.30 Emotional distress damages
§31:30.40 Attorney’s fees
§31:30.50 Prejudgment interest
§31:30.60 Rejection of statutory offer to compromise
§31:30.70 Interest rate
§31:30.80 Liability insurer’s coverage of prejudgment interest
D. PUNITIVE DAMAGES
§31:40 Punitive Damages
§31:40.10 General principles of punitive damage awards
§31:40.20 Constitutional considerations
§31:40.30 Required conduct for punitive damage claim
§31:40.40 Determining amount of punitive damages
§31:40.50 Punitive damages arising from conduct of agents or employees
§31:40.60 Issues relating to evidence and trial
§31:40.70 Plaintiff’s duty to notify Insurance Commissioner
§31:40.80 Appellate review of punitive damage awards
CHAPTER 32: PRELIMINARY CONSIDERATIONS
IN INSURANCE LITIGATION
A. STANDING TO SUE INSURER
§32:10 Real party in interest requirement
§32:10.10 First party standing
§32:10.20 Third party standing to sue defendant’s insurer
§32:10.30 Action against personal representative of deceased insured
B. STANDING OF INSURER TO SUE AND DEFEND
§32:20 Standing of insurer to sue and defend
§32:20.10 Insurer not proper party in underlying action against insured
§32:20.20 Nonadmitted insurers
C. ARBITRATION CONSIDERATIONS
§32:30 Introduction
§32:30.10 Statutory arbitration
§32:30.20 Contractual arbitration
D. JURISDICTION & VENUE
§32:40 Introduction
§32:40.10 Subject matter jurisdiction
§32:40.20 Personal jurisdiction
§32:40.30 Venue
§32:40.40 Federal jurisdiction
§32:40.50 Service of process
§32:40.60 Choice of law
E. FORMS
Form 32:1 Sample Motion for Change of Venue
Form 32:2 Notice to Plaintiff and State Court of Removal of State Action to
Federal Court under ERISA
Form 32:3 Notice to Plaintiff and Federal Court of Removal to Federal Court
Form 32:4 Sample Format for Arbitration Brief
CHAPTER 33: PLEADINGS IN INSURANCE
LITIGATION
A. PLEADINGS GENERALLY
§33:10 Introduction
§33:10.10 Pleadings permitted in federal and state courts
B. ATTACKING THE PLEADINGS
§33:20 Motions attacking the pleadings
§33:20.10 Demurrers
§33:20.20 Motions to strike
§33:20.30 Motions for judgment on the pleadings
§33:20.40 Motion for summary judgment or summary adjudication
C. CAUSES OF ACTION BY FIRST PARTY (INSURED) AGAINST INSURER
§33:30 Introduction
§33:30.10 Breach of implied covenant of good faith and fair dealing
§33:30.20 Breach of contract
§33:30.30 Fraud
§33:30.40 Negligent misrepresentation
§33:30.50 Violation of Unfair Competition Act
§33:30.60 Violation of Insurance Code §790.03
§33:30.70 RICO violations
§33:30.80 HMO liability under statute
§33:30.90 Other tort actions against insurers
D. CAUSES OF ACTION BY THIRD PARTY AGAINST INSURER
§33:40 Introduction
§33:40.10 Third party beneficiary
§33:40.20 Assignment of action against insurer
§33:40.30 Judgment creditor of insured
§33:40.40 Claimant’s independent tort claims against the insurer
E. ACTIONS BY JUDGMENT CREDITORS (Insurance Code §11580(b)(2))
§33:50 Judgment creditors claims against judgment debtors
§33:50.10 Statutory authority for action
§33:50.20 Recovery cannot exceed policy limits
§33:50.30 Defenses against judgment creditor available to insurer
§33:50.40 Offsets available to the insurer
F. PUNITIVE DAMAGES IN ACTIONS AGAINST INSURERS
§33:60 Introduction
§33:60.10 Requirement of the commission of a tort
§33:60.20 Pleading punitive damage claims
G. ACTIONS BY INSURERS
§33:70 Introduction
§33:70.10 Standing to sue
§33:70.20 Equitable indemnity and contribution
§33:70.30 Declaratory relief
§33:70.40 Interpleader
H. FORMS
Form 33:1 Sample Cause of Action for Breach of Contract (see §33:30.20)
Form 33:2 Sample Cause of Action for Bad Faith/Breach of the Implied
Covenant of Good Faith and Fair Dealing (see §33:30.10)
Form 33:3 Sample Cause of Action for Breach of Fiduciary Duty
Form 33:4 Sample Cause of Action for Declaratory Relief
Form 33:5 Sample Complaint for Subrogation, Contribution and Equitable
Indemnity
Form 33:6 Sample Cause of Action for Fraud
Form 33:7 Sample Complaint for Interpleader and Declaratory Relief
Form 33:8 Sample Cause of Action for Negligence Against Agent
Form 33:9 Sample Cause of Action for Negligent Misrepresentation Against
Agent of Insurer
Form 33:10 Sample Cause of Action from Third Party Judgment Creditor Against
Insurer [Civil Code §3300, 3302]
Form 33:11 Sample Complaint for Reformation
Form 33:12 Sample Complaint for Rescission
Form 33:13 Sample Complaint for Unfair Competition (B & P §17200)
Form 33:14 Sample Answer to Complaint
Form 33:15 Sample Assignment of Action Against Insurer
Form 33:16 Grant of Lien for Deferral of Execution
Form 33:17 Sample Demurrer (CCP §§430.10-430.80)
Form 33:18 Sample Motion to Strike Portion of Complaint (CCP §435-437)
Form 33:19 Sample Motion for Judgment on the Pleadings (CCP §438)
CHAPTER 34: DISCOVERY, TRIAL &
SETTLEMENT
A. DISCOVERY
§34:10 Interrogatories
§34:10.10 Form interrogatories
§34:10.20 Depositions
§34:10.30 Requests for production/demand for inspection
§34:10.40 Requests for admission
§34:10.50 Cases between third party and an insured
B. TRIAL OF INSURANCE LITIGATION MATTER
§34:20 Introduction
§34:20.10 Jury or court trial
§34:20.20 Evidentiary considerations
§34:20.30 Jury selection
C. SETTLEMENT
§34:30.10 Insurer’s settlement of third party claim
§34:30.20 Global settlements
§34:30.30 Piecemeal settlements
§34:30.40 Excess insurers affected by settlement
D. BANKRUPTCY OF INSURED
§34:40 Introduction
§34:40.10 Policy proceeds where debtor is owner and beneficiary
§34:40.20 Third party’s interest in proceeds
§34:40.30 Exemption for life insurance proceeds
§34:40.40 Claims against insurer
§34:40.50 Automatic stay
§34:40.60 Jurisdiction of bankruptcy court
E. FORMS
Form 34:1 Sample Demand for Examination under Oath
Form 34:2 Sample Letter to Insurer Requesting Copy of Client’s Policy
Form 34:3 Sample Interrogatories to Insurer from Insured in Bad Faith Action
under First Party Coverage
Form 34:4 Sample Interrogatories to Insured from Insurer in Coverage Dispute
under a First Party Policy of Insurance
Form 34:5 Sample Requests for Admission to Insurer by Insured under First
Party Coverage Dispute
Form 34:6 Sample Requests for Admission to Insured
Form 34:7 Sample Demand for Inspection to Insurer from Insured in Coverage
Dispute
Form 34:8 Sample Demand for Inspection to Insured from Insurer in Coverage
Dispute
Form 34:9 Sample Deposition Notice
Form 34:10 Sample Deposition Questions/Sample Questions for Examination
under Oath
Form 34:11 Sample Deposition of Insurer’s Employee
Form 34:12 Sample Deposition of Firefighter
Form 34:13 Sample Deposition of Arson Expert
INDEX
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