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Accident. A sudden and unexpected event without intention or design. While the term is used many policies including automobile, general liability, maritime and workers compensation, it is not usually defined in the policy. An accident should be distinguished from an intentional act such as sexual harassment. (SCI Liquidating Corporation etc. et al v. Hartford Fire Ins. Co. Eleventh Circuit, Georgia, July, 1999). Intentional acts have been found to be not covered no matter how the claims are couched ( U. S. Second Circuit, New York, Dec. 1999). Unintended injuries resulting from intentional acts are likely not be covered (Nabozny v. Burkhardt, Michigan Sup. Ct., Mar. 2000).
Advertising. While the phrase "advertising " is not defined in the policy. The California Supreme Court (Bank of the West v. Superior Court (1992) 2 Cal.4th 1254, 1265.) touched on the meaning of this term in this way: "Although we need not address the issue, we note that courts have disagreed on the question of what constitutes 'advertising' for these purposes. Most of the published opinions hold that 'advertising' means widespread promotional activities directed to the public at large."
Some courts have adopted the definition provided by Black's Law Dictionary at 54 (6th ed. 1990): "To advise, announce, apprise, command, give notice of, inform, make known, publish. To call a matter to public attention by any means whatsoever. Any oral, written or graphic statement made by the seller in any manner in connection with the solicitation of business and includes . . . statements and representations . . . contained in any notice, handbill, sign, catalog, or letter printed on or contained in any tag or label attached to or accompanying any merchandise."
Other courts have construed advertising broadly finding that it includes virtually any solicitation, including even one-on-one (American State Insurance Co. v. Canyon Creek [N.D. Cal. 1991] 786 F.Supp. 821, 828; Sentex Systems, Inc. v. Hartford Acc. & Indem. Co., 882 F.Supp. 930 (C.D. Cal. 1995); United States Fire & Guaranty Ins. Co. v. Star Technologies, 935 F. Supp. 1110 (D. Ore. 1996)) and John Deere Ins. Co. v. Shamrock Industries Inc. (D. Minn. 1988)] 696 F. Supp. 434, 440)
Courts construing the term narrowly define advertising as requiring public or widespread distribution of the alleged advertising material. (Fox Chemical Co., Inc. v. Great American Insurance Co., 264 N.W.2d 385 (Minn. 1978); International Ins. v. Florists' Mutual Ins. Co., 211 Ill.App.3d 428 (1990); and Playboy Enterprises v. St. Paul Fire & Marine Ins. (7th Cir. 1985).Conn. Sup. Ct, April, 2001: QSP, Inc. v. Aetna Casualty and Surety Company )
A third line of cases determines what is advertising by the scope of solicitation in relationship to the total size of the customer-population. ( New Hampshire Ins. Co. v. Foxfire, Inc., 820 F. Supp. 489 (N.D. Cal. 1993); New Hampshire Ins. Co. v. R.I. Chaides Construction Co., Inc., 847 F.Supp. 1452 (N.D. Cal. 1994); Peerless Lighting Corp. v. American Motorists Ins. Co.(2000) 82 Cal.App.4th 99)
Advertising Injury. Advertising injury is generally defined as arising out of these offenses: oral or written publication of material that slanders or disparages a person or organization, or its products or services, publication of material that violates a right to privacy, misappropriation of advertising ideas or style of doing business, or infringement of copyright, title or slogan, but not infringement of trademark and trade names alone. (Palmer v. Truck Ins. Exchange (1999) 21 Cal.4th 1109). Courts have generally found that the offense must be connected with the insured's advertising activities. (Delta Computer Corp. v. Walter J. Frank, U.S. Fifth Circuit - Texas, Dec. 1998; St. Paul Fire & Marine Ins. Co. v. Advanced International Systems (E.D. Va. 1993) 824 F. Supp. 583, (4 Cir. 1994) aff'd, 21 F.3d 424; Bank of the West v. The Superior Court of Contra Costa County (1992) 2 Cal. 4 1254); Advance Watch Co., Ltd. V. Kemper National Ins. Co., et al. (6 Cir. 1996) 99 F. 3d 795; Poof Toy Products, Inc. v. USF&G (E.D. MI 1995) 891 F. Supp. 1228). There also must be a causal link between an offense enumerated in the policy and the injury (GAF Sales & Service, Inc., et al. v. Hastings Mutual Ins. Co. (1997) 568 N. W. 2d 165)
Advertising injury would apparently not include misappropriation of computer software or similar intellectual property (American States Ins. Co. v. Kenneth Vortherms et al, Missouri Court of Appeals, Sept. 1999). There may also be no coverage for misappropriation of customer lists (Western States Ins. Co. et al v. Wisconsin Wholesale Tire, Seventh Circuit - Wisconsin, July, 1999. Infringement based on trade dress would be covered if the trade dress was published in advertising, including a catalogue (El-Com Hardware v. Fireman's Fund Insurance Co.)
Ambiguous policy language. A court that is faced with an argument for coverage based on assertedly ambiguous policy language must first attempt to determine whether coverage is consistent with the insured's objectively reasonable expectations. In so doing, the court must interpret the language in context, with regard to its intended function in the policy. This is because language in a contract must be construed in the context of that instrument as a whole, and in the circumstance of that case, and cannot be found to be ambiguous in the abstract.(Bank of the West v. Superior Court (1992) 2 Cal.4th 1254, 1265.) Also the absence of an expression or word in a policy is an appropriate consideration in the interpretation of the contract. A policy provision will be considered ambiguous when it is capable of two or more constructions, both of which are reasonable." ( Waller v. Truck Ins. Exchange, Inc. (1995) 11 Cal. 4th 1, 18 [44 Cal. Rptr. 2d 370, 900 P.2d 619]; Bay Cities Paving & Grading, Inc. v. Lawyers' Mutual Ins. Co. (1993) 5 Cal. 4th 854, 867 [21 Cal. Rptr. 2d 691, 855 P.2d 1263].) The fact that a term is not defined in the policies does not make it ambiguous. ( Bank of the West v. The Superior Court of Contra Costa County (1992) 2 Cal. 4 1254); Bay Cities Paving & Grading, Inc. v. Lawyers' Mutual Ins. Co.(1993) 5 Cal. 4th at p. 866; Castro v. Fireman's Fund American Life Ins. Co. (1988) 206 Cal. App. 3d 1114, 1120 [253 Cal. Rptr. 833].) Nor does "disagreement concerning the meaning of a phrase," or " 'the fact that a word or phrase isolated from its context is susceptible of more than one meaning.' " ( Castro v. Fireman's Fund American Life Ins. Co. (1988) 206 Cal. App. 3d at p. 1120, 253 Cal. Rptr. 833.) " '[L]anguage in a contract must be construed in the context of that instrument as a whole, and in the circumstances of that case, and cannot be found to be ambiguous in the abstract.' " (Bank of the West v. The Superior Court of Contra Costa County (1992) 2 Cal. 4 1254)) "If an asserted ambiguity is not eliminated by the language and context of the policy, courts then invoke the principle that ambiguities are generally construed against the party who caused the uncertainty to exist (i.e., the insurer) in order to protect the insured's reasonable expectation of coverage." (La Jolla Beach & Tennis Club, Inc. v. Industrial Indemnity Co. (1994) 9 Cal. 4th 27, 37 [36 Cal. Rptr. 2d 100, 884 P.2d 1048].)
Bodily injury. This term is defined in most policy using very similar language. The term means bodily injury, sickness or disease sustained by a person, including death resulting from any of these at any time. In some jurisdiction such as New York bodily injury includes emotional distress even without physical manifestation ( U. S. Second Circuit, New York, Dec. 1999).
Massachusetts Appeals Court in Richardson v. Liberty Mutual, Feb. 1999: "Bodily injury" as used in an insurance policy is a narrow and unambiguous term. It includes only actual physical injuries to the human body and the consequences thereof; it "does not include humiliation and mental anguish and suffering." Allstate Ins. Co. v. Diamant, 401 Mass. 654, 656, 658 (1988). "Bodily injury imports harm arising from corporeal contact. In this connection 'bodily' refers to an organism of flesh and blood. It is not satisfied by anything short of physical, and is confined to that kind of injury." Williams v. Nelson, 228 Mass. 191, 196 (1917). The words "bodily injury" in an insurance policy do not comprehend nonphysical harm to the person, such as mental suffering not connected with or arising out of physical injuries. Allstate Ins. Co. v. Diamant, 401 Mass. at 656-658. Those words "exclude the coverage of mental pain." Sullivan v. Boston Gas Co., 414 Mass. 129, 138 n.9 (1993). In short, "emotional distress is not a bodily injury" for insurance coverage purposes. McNeill v. Metropolitan Property & Liab. Ins. Co., 420 Mass. 587, 590 (1995) (no second "per person" bodily injury claim for plaintiff who witnessed decedent daughter's injuries at automobile accident scene and as a result suffered emotional distress that exacerbated his diabetic condition and led to his developing an ulcer).(9) Compare Lewis v. Springfield, 261 Mass. 183, 187-188 (1927) (mental suffering of plaintiff injured by defect in road could properly be considered in determining his damages award)."
Contingent insurance. This is liability coverage that applies when the insured has no primary coverage or the primary carrier refuses to defend. International policies are often contingent and therefore provide coverage when there is no primary coverage in the country in which the claim arises.
Continuous trigger. Uninterrupted, repeated events may repeatedly trigger coverage if the events are occurrences. Liability coverage for property damage or bodily injury is predicated on an occurrence, which is usually defined as an accident, including continuous or repeated exposure to substantially the same general harmful conditions. Under the continuous trigger doctrine all policies during the period of repeated occcurrences have coverage (Chemstar, Inc. v. Liberty Mutual Ins. Co.(9th Cir. 1994) 41 F.3d 429). In Montrose Chemical Corp. v. Admiral Ins. Co. (1995) 10 Cal.4th 645, the California Supreme Court established certain principles applicable in third party liability insurance cases involving continuous or progressively deteriorating damage or injury. Specifically, Montrose established that standard comprehensive general liability language provides coverage for property damage occurring during the policy period, and in the case of successive policies, damage that is continuous or progressively deteriorating throughout several policy periods is potentially covered by all policies in effect during those periods (the continuous injury trigger of coverage). The Montrose court described the settled rule that an insurer on the risk when continuous or progressively deteriorating damage or injury first manifests itself remains obligated to indemnify the insured for the entirety of the ensuing damage or injury," up to policy limits. Each carrier then has a right of equitable contribution from each of the others for defense and indemnity.
Contractual liability. Coverage for contractual liability by reason of the assumption of liability in a contract or agreement is excluded. However, if there would have been liability of the insured even if there were no contract, the contractual liability exclusion does not apply. Some courts have held that the legal obligation to pay under a liability policy extends to a claim based on the "nature of the risk and the injury" rather than just the claim being made.(Vandenberg v. Superior Court (1999) 21 Cal. 4th 815)Also, if the contract is was entered into prior to the occurrence and it is an "insured contract," the exclusion does not apply.
Cumis counsel. An attorney selected by the insured and whose fees are paid for by the defending liability insurer.
Duty to defend.
A liability insurer owes a broad duty to defend its insured against claims that create a potential for indemnity. (Gray v. Zurich Insurance Co. (1966) 65 Cal.2d 263 [54 Cal. Rptr. 104, 419 P.2d 168]. As was said in Gray, "the carrier must defend a suit which potentially seeks damages within the coverage of the policy." (Id. at p. 275). Implicit in this rule is the principle that the duty to defend is broader than the duty to indemnify. An insurer may owe a duty to defend its insured in an action in which no damages ultimately are awarded. Whether the insurer owes a duty to defend is determined by comparing the factual allegations of the complaint and the extrinsic facts known to the insurer with the terms of the policy. (Montrose Chemical Corp. v. Superior Court (1993) 6 Cal.4th 287, 295; Gray v. Zurich Insurance Co. (1966) 65 Cal.2d 263, 275-277.) If a single issue exists which is even potentially within the policy coverage, the insurer has a duty to defend the insured against a third-party action in its entirety. (Buss v. Superior Court (1997) 16 Cal.4th 35, 48).) Any doubt as to whether the facts give rise to a duty to defend is resolved in favor of the insured. (Horace Mann Ins. Co. v. Barbara B. (1993) 4 Cal.4th 1076, 1081.)
Enhanced duty of good faith.
The doctrine of an enhanced obligation of good faith while
defending under a reservation of rights ( L & S Roofing Supply Co. v. St.
Paul Fire & Marine Insurance Co., 521 So. 2d 1298 (Ala. 1987)). The
seminal case comes from the State of Washington. See Tank v. State Farm
Fire & Cas. Co., 105 Wash. 2d 381, 715 P. 2d 1133 (1986). A similar
argument was presented in a later Washington case where the insurer contended
that the doctrine of estoppel could not create coverage where none existed under
the policy. The Washington court rejected it by holding that such rule was
limited to contract actions and then described its rule announced in Tank
as creating a remedy in tort. See Safeco Ins. Co. of America v. Butler,
118 Wash. 2d 383, 823 P.2d 499 (1992).
The insurer loses any right to assert any policy defense to
coverage and requires the carrier to reimburse its insured for the liability
that the insured incurred to a third party if it accepts the defense of its
insured but fails to conduct that defense in such a way as to comport with the
best interest of the insured. (Alabama Sup. Ct., April, 2001: Aetna v. Mitchell)
Equitable contribution. An insurer has the right to obtain a fair contribution from other insurers toward the defense and indemnity of a mutual insured. The basis of allocation of defense costs varies. It might be the relative number of policies, time-on-risk, or indemnity exposure. The allocation of indemnity might also include limits and strength of coverage defenses. In at least some jurisdictions, this doctrine is independent and distinct from equitable subrogation and so does not involve the insured. (Fireman's Fund Ins. Co. v. Maryland Casualty Co. (1998) 65 Cal. App. 4th 1279) Exclusions. These policy provisions limit the scope of coverage. Inasmuch as an exclusion does not grant coverage but limits the scope of protection, it must be in clear and precise language. Exclusions should be interpreted individually not not as a group. The New Jersey Supreme Court has held that exclusions bear no relationship with one another and should not be regarded as inconsistent with another exclusion. Weedo v. Stone-E-Brick, 81 N.J. 233, 248, 405 A.2d 788 (1979). Financial loss. Many European policies provide coverage for financial loss to a third party even if the loss does not arise from bodily injury, property damage, personal injury or advertising injury. Insured contract. An insured contract is an agreement pertaining to the insured business, including construction, demolition and maintenance work, leases, licenses. Indemnification of others against tort liability, liability that is imposed by law, is covered. There are certain restriction found under the definition of "insured contract" in the form. (See CG 00 01 01 96, Copyright Insurance Services Office, Inc., 1994) Multiple occurrences. In making a determination of multiple occurrences most courts have attended to the "cause" of the damage rather than the effect. Where there is one uninterrupted proximate cause which results almost immediately in more than one impact or event, the courts have found that there was one accident or occurrence. (Hartford Accident & Indemnity Co. v. Wesolowski, 33 N.Y.2d 169, 350 N.Y.S.2d 895 (1973); Appalachian Ins. Co. v. Liberty Mut. Ins. Co. (3d Cir. 1982) 676 F.2d 56, 61)). Where one impact or event causes immediate damage to several persons or properties the courts have also found one accident or occurrence. (St. Paul Mercury Indemnity Co. v. Rutland, 225 F.2d 689 (5th Cir. 1959); Wilkinson & Son, Inc. v. Providence Washington Insurance Co., 424 N.J. Super. 466, 307 A.2d 639 (1973)). Under the cause test, there is a single occurrence when "there was but one proximate, uninterrupted, and continuing cause which resulted in all the injuries and damages." When all injuries emanate from a common source or process, there is only a single occurrence for purposes of policy coverage. It is irrelevant that there are multiple injuries or injuries of different magnitudes, or that the injuries extend over a period of time. Conversely, when a cause is interrupted, or when there are several autonomous causes, there are multiple "occurrences" for purposes of determining policy limits and assessing deductibles. (Caldo Oil Co. v.1 State Water Resources Control Bd. (1996) 44 Cal. App. 4th 1821, 1828). For a fuller treatment of this issue. Notice. Prompt notification of a loss by the insured is required. For a carrier to deny indemnity based upon late
notification a showing of prejudice may be required. Occurrence. An occurrence is, typically, defined as an accident or event, including continuous or repeated exposure to the same general conditions causing the damage. The CGL policy restricts coverage to damages "caused by an occurrence," which, in standard pre-1986 policies, was defined as an "accident, including continuous or repeated exposure to conditions, which results in bodily injury or property damage neither expected nor intended from the standpoint of the insured." Although more recent policies have replaced the term "accident" with "event" (to include gradual events within the concept of accident), the phrase "neither expected nor intended" focuses coverage on unexpected or accidental injuries that are fortuitous and not planned or intended. This concept of fortuity is basic to insurance law. ( Chu v. Canadian Indemnity Co. (1990) 224 Cal. App. 3d 86, 94-95 [274 Cal. Rptr. 20] (Chu).) Insurance typically is designed to protect against contingent or unknown risks of harm, not to protect against harm that is certain or expected. (Chu v. Canadian Indemnity Co. (1990), 224 Cal. App. 3d at pp. 94-95.) In other words, such insurance generally protects against risks of loss rather than certainties of loss. (See as an example, Shell Oil Co. v. Winterthur Swiss Ins. Co. (1993) 12 Cal. App. 4th 715, 747 [15 Cal. Rptr. 2d 815] [the phrase "expected or intended" precludes coverage for damage that the insured subjectively intended to be a result of its conduct, as well as damage that it in fact subjectively foresaw as practically certain to be a result of its conduct].)
In an "occurrence" liability form, the occurrence is the trigger for coverage of bodily injury or property damage claims. According to their definitions in the policy bodily injury or property damage must occur within the policy term and territory.
Note: personal injury and advertising, in an "occurrence" form, are based on an offense rather than an occurrence. Offense is not defined. Other insurance clause "Other insurance" clauses limit an insurer's responsibility for a claim if "other insurance" is available to cover it. Originally, the clauses appeared in property insurance policies and were intended to eliminate the problem of fraudulent claims induced by over-insuring. See Carriers Ins. Co. v. American Policyholders' Ins. Co., 404 A.2d 216, 218 (Me. 1979). In a context such as the one here, the clauses function not so much as to deter fraudulent claims as simply to limit an insurer's exposure where the insured happens to hold multiple insurance policies covering the same loss. Cf. id.; see also R. J. Robertson, Jr., "Other Insurance" Clauses in Illinois, 20 S. Ill. U. L.J. 403, 405 (1996). Patent Infringement. It
is a common opinion that patent infringement does not in itself constitute advertising injury. Despite revisions to the patent act in 1996, which included "offers to sell" within the definition of patent infringement. Even if the offense arises in the course of advertising a California Court held that the term in the policy "infringement of title" is not broad enough to include patent infringement. (Maxconn Inc. v. Truck Insurance Exchange; California Appellate Court). Personal injury. Personal injury coverage includes the following offenses: False arrest Malicious prosecution. Despite the coverage, some jurisdiction (e.g.California) do not allow indemnification for intentional acts. Wrongful eviction, wrongful entry or invasion of private occupancy. There must be some invasion of the right to hold real property. Some courts have found that this offense includes housing discrimination (State Farm v. Westchester Investment Co., 721 F. Supp. 1165 (C.D. Cal. 1989) Note: some older policies add the phrase "or other invasion of the right of private occupancy" which had prompted attempts to broaden coverage. The creation or maintenance of a hazardous condition that threaten the occupancy of property may be covered if policy has broad language. Libel or slander of a person or organization by oral or written publication. Violation of right of privacy by oral or written publication.
Other insurance" clauses come in three types. The first, an "escape" clause, is the most basic: it simply denies any coverage for a claim if other insurance is available. The second, a "pro rata" clause, extends coverage to a portion of the total loss claimed, usually based on the limits of the applicable policies.(5) The third, an "excess" clause, is the type at issue in this case; it extends coverage only to the extent that other available insurance is insufficient to cover the claim. For example, if insurer A and B both cover a claim, and B's policy limit is $3 million, an excess clause in A's policy would require A to pay out on the claim only to the extent that the claim exceeded $3 million (up to A's policy limit).
Property damage. This term is defined in most policies, using very similar language. Physical injury to tangible property, including all resulting loss of use of that property. Loss of use of tangible property that is not physically injured.
Reformation. The policy, like other contracts, can be changed to conform to the mutual intent of the contracting parties. As an example, if a policy was not issued, or a type of coverage was not included, due to an error of the carrier's agent, the policy can be reformed. The insured need only to show that the carrier would have written the coverage and tender the premium. or difference in premium. Accordingly, a broker who has an agency contract with a carrier would not be liable for the amounts that would be covered, but only to the carrier for the premium the carrier would have earned. The broker must show that he and the insured clearly intended to place the coverage with the carrier and that the carrier would have written it.(George v. Empire Fire & Marine Ins. Co., So. Carolina Sup. Ct., April, 2001)