Opinion ID: 1176222
Heading Depth: 3
Heading Rank: 2

Heading: Relevant Insurance Law Principles

Text: While insurance contracts have special features, they are still contracts to which the ordinary rules of contractual interpretation apply. ( Bank of the West v. Superior Court (1992) 2 Cal.4th 1254, 1264, 10 Cal.Rptr.2d 538, 833 P.2d 545; see AIU, supra, 51 Cal.3d at pp. 821-822, 274 Cal. Rptr. 820, 799 P.2d 1253.) The fundamental goal of contractual interpretation is to give effect to the mutual intention of the parties. ( Bank of the West v. Superior Court, supra, 2 Cal.4th at p. 1264, 10 Cal.Rptr.2d 538, 833 P.2d 545.) Such intent is to be inferred, if possible, solely from the written provisions of the contract. ( AIU, supra, 51 Cal.3d at p. 822, 274 Cal.Rptr. 820, 799 P.2d 1253.) If contractual language is clear and explicit, it governs. ( Bank of the West v. Superior Court, supra, 2 Cal.4th at p. 1264, 10 Cal. Rptr.2d 538, 833 P.2d 545.) 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. ( Bay Cities Paving & Grading, Inc. v. Lawyers' Mutual Ins. Co., supra, 5 Cal.4th at p. 866, 21 Cal.Rptr.2d 691, 855 P.2d 1263; Bank of the West v. Superior Court, supra, 2 Cal.4th at p. 1264, 10 Cal. Rptr.2d 538, 833 P.2d 545; Castro v. Fireman's Fund American Life Ins. Co. (1988) 206 Cal.App.3d 1114, 1120, 253 Cal.Rptr. 833.) Nor does [d]isagreement 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., supra, 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. Superior Court, supra, 2 Cal.4th at p. 1265, 10 Cal.Rptr.2d 538, 833 P.2d 545, italics omitted.) 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.) An insurer has a duty to defend when the policy is ambiguous and the insured would reasonably expect the insurer to defend him or her against the suit based on the nature and kind of risk covered by the policy, or when the underlying suit potentially seeks damages within the coverage of the policy. ( La Jolla Beach & Tennis Club, Inc. v. Industrial Indemnity Co., supra, 9 Cal.4th at p. 38, 36 Cal.Rptr.2d 100, 884 P.2d 1048; Montrose Chemical Corp. of Calif, v. Superior Court (1993) 6 Cal.4th 287, 299, 24 Cal. Rptr.2d 467, 861 P.2d 1153; Gray v. Zurich Insurance Co. (1966) 65 Cal.2d 263, 271-275, 54 Cal.Rptr. 104, 419 P.2d 168.) The duty to defend is a continuing one, arising on tender of defense and lasting until the underlying lawsuit is concluded [citation], or until it has been shown that there is no potential for coverage.... ( Montrose Chemical Corp. of Calif, v. Superior Court, supra, 6 Cal.4th at p. 295, 24 Cal.Rptr.2d 467, 861 P.2d 1153, original italics; Buss v. Superior Court (1997) 16 Cal.4th 35, 46, 65 Cal.Rptr.2d 366, 939 P.2d 766 [defense duty arises as soon as tender is made].) It extends to allegations that are actually and even only potentially covered. ( Buss v. Superior Court, supra, 16 Cal.4th at p. 46, 65 Cal.Rptr.2d 366, 939 P.2d 766.) Indeed, the insurer must defend the entire action even when only one of several causes of action is potentially covered. ( Horace Mann Ins. Co. v. Barbara B. (1993) 4 Cal.4th 1076, 1081, 17 Cal.Rptr.2d 210, 846 P.2d 792; Buss v. Superior Court, supra, 16 Cal.4th at p. 49, 65 Cal.Rptr.2d 366, 939 P.2d 766 [insurer cannot parse the claims, dividing those that are at least potentially covered from those that are not].)