Opinion ID: 1158522
Heading Depth: 2
Heading Rank: 1

Heading: The Commercial General Liability Policy

Text: (1) In pertinent part, a CGL policy, often referred to as a business general liability policy, provides liability insurance for businesses. The policy is written in two essential parts: the insuring agreement, which states the risk or risks covered by the policy, and the exclusion clauses, which remove coverage for risks that would otherwise fall within the insuring clause. ( Collin v. American Empire Ins. Co. (1994) 21 Cal. App.4th 787, 802 [26 Cal. Rptr.2d 391].) Before even considering exclusions, a court must examine the coverage provisions to determine whether a claim falls within [the policy terms]. ( Hallmark Ins. Co. v. Superior Court (1988) 201 Cal. App.3d 1014, 1017 [247 Cal. Rptr. 638].) This is significant for two reasons. First, `... when an occurrence is clearly not included within the coverage afforded by the insuring clause, it need not also be specifically excluded.' ( Glavinich v. Commonwealth Land Title Ins. Co. (1984) 163 Cal. App.3d 263, 270 [209 Cal. Rptr. 266].) Second, although exclusions are construed narrowly and must be proven by the insurer, the burden is on the insured to bring the claim within the basic scope of coverage, and (unlike exclusions) courts will not indulge in a forced construction of the policy's insuring clause to bring a claim within the policy's coverage. ( Collin v. American Empire Ins. Co., supra, 21 Cal. App.4th at p. 803.) Accordingly, the insured has the burden of showing that there has been an occurrence within the terms of the policy. ( Ibid. ) (2) 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 (including T.I.E.'s policy) 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 (Ins. Code, §§ 22, 250), not to protect against harm that is certain or expected. ( Chu, supra, 224 Cal. App.3d at pp. 94-95.) In other words, such insurance generally protects against risks of loss rather than certainties of loss. ( Ibid. ; see e.g., 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].) (3) Standard CGL policies define bodily injury to mean: bodily injury, sickness or disease [including death at any time resulting therefrom] sustained by any person. (3 Keller & Golub, Cal. Insurance Law & Practice (1995) ch. 49, General Liability Policies, § 49.14[1], pp. 49-27 to 49-28.) The property loss section of the standard policy provides coverage for physical injury or destruction of tangible property which occurs during the policy term. The focus of coverage for property damage is therefore the property itself, and does not include intangible economic losses, violation of antitrust laws or nonperformance of contractual obligations. (See, e.g., Gulf Ins. Co. v. L.A. Effects Group, Inc. (9th Cir.1987) 827 F.2d 574, 578 [no coverage under business general liability policy for insured's alleged nonperformance of contractual obligations to create special visual effects for motion picture]; Lassen Canyon Nursery v. Royal Ins. Co. of America (9th Cir.1983) 720 F.2d 1016, 1018 [business liability policy for property damage does not cover claims for strictly economic losses caused by insured's alleged antitrust violations]; Montrose Chemical Corp. v. Superior Court (1993) 6 Cal.4th 287, 303 [24 Cal. Rptr.2d 467, 861 P.2d 1153] [recognizing that a suit seeking recovery for injuries to intangible economic interests is not a suit `of the nature and kind' covered by a CGL policy]; Chatton v. National Union Fire Ins. Co. (1992) 10 Cal. App.4th 846 [13 Cal. Rptr.2d 318] [hereafter Chatton ] [ruling there was no coverage for emotional distress damages resulting from investment losses caused by negligent misrepresentation]; Giddings v. Industrial Indemnity Co. (1980) 112 Cal. App.3d 213, 217 [169 Cal. Rptr. 278] [hereafter Giddings ] [no coverage for intangible economic interests, including breach of securities laws and fraud].) As Giddings observed, strictly economic losses like lost profits, loss of goodwill, loss of the anticipated benefit of a bargain, and loss of an investment, do not constitute damage or injury to tangible property covered by a comprehensive general liability policy. [Citations.] A complaint seeking to recover damages of this nature from an insured falls within the scope of the insurance coverage only where these intangible economic losses provide `a measure of damages to physical property which is within the policy's coverage.' [Citations]. ( Id. at p. 219.) Finally, by statute, and as a matter of public policy, the insurer may not provide coverage for willful injuries by the insured against a third party. (Ins. Code, § 533.)