Opinion ID: 2629057
Heading Depth: 3
Heading Rank: 1

Heading: Standard of Review and Insurance Law Principles

Text: (1) In general, interpretation of an insurance policy is a question of law and is reviewed de novo under settled rules of contract interpretation. ( E.M.M.I. Inc. v. Zurich American Ins. Co. (2004) 32 Cal.4th 465, 470 [9 Cal.Rptr.3d 701, 84 P.3d 385] ( E.M.M.I . ); Waller v. Truck Ins. Exchange, Inc. (1995) 11 Cal.4th 1, 18 [44 Cal.Rptr.2d 370, 900 P.2d 619] ( Waller ).) The fundamental rules of contract interpretation are based on the premise that the interpretation of a contract must give effect to the `mutual intention' of the parties. `Under statutory rules of contract interpretation, the mutual intention of the parties at the time the contract is formed governs interpretation. (Civ. Code, § 1636.) Such intent is to be inferred, if possible, solely from the written provisions of the contract. ( Id., § 1639.) The clear and explicit meaning of these provisions, interpreted in their ordinary and popular sense, unless used by the parties in a technical sense or a special meaning is given to them by usage ( id., § 1644), controls judicial interpretation. ( Id., § 1638.)' ( Waller, supra, 11 Cal.4th at p. 18.) (2) An insurance policy provision is ambiguous when it is susceptible of two or more reasonable constructions. ( E.M.M.I., supra, 32 Cal.4th at p. 470.) If ambiguity exists, however, the courts must construe the provisions in the way the insurer believed the insured understood them at the time the policy was purchased. (Civ. Code, § 1649.) In addition, if, after the court evaluates the policy's language and context, ambiguities still exist, the court must construe the ambiguous language against the insurer, who wrote the policy and is held `responsible' for the uncertainty. ( AIU Ins. Co. v. Superior Court (1990) 51 Cal.3d 807, 822 [274 Cal.Rptr. 820, 799 P.2d 1253] ( AIU ).) Particularly, [i]n the insurance context, . . . ambiguities [are resolved] in favor of coverage so as to protect the insured's reasonable expectation of coverage. ( Ibid.; see 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].) (3) In addition, to prevail on a duty to defend claim, an insured need `only show that the underlying claim may fall within policy coverage. . . .' ( Ortega Rock Quarry v. Golden Eagle Ins. Corp. (2006) 141 Cal.App.4th 969, 977 [46 Cal.Rptr.3d 517].) Insurers have the more difficult burden of proving that the underlying claim cannot fall within policy coverage. ( Ibid. )