Let me rewrite the title of this post for everyone: Injury Victims Lose Against Insurance Company When Second District Court of Appeal Gets It Exactly Wrong in Baker v. National Interstate Insurance Company.

When a company buys a general liability policy, most folks would assume that the reason is to cover general liability. For instance, an injury victim’s damages in a personal injury or wrongful death action. But I guess not according to the Second District Court of Appeal in Baker.
In Baker, the court of appeal overruled a trial court’s decision and interpreted an exclusion clause as to extinguish liability for the wrongful death and injuries of a bus driver.
The case goes something like this: Four Winds, a transportation and school bus company, buys an insurance policy – a general liability policy. Next, La Shaun Clemmons, who owned another school bus business, bought a bus from Four Winds. Subsequent to the sale of the bus, Clemmons asked Four Winds to inspect and prepare the bus for a change of ownership inspection that is conducted by the highway patrol. Later Clemmons is involved in an accident and killed when her seat broke loose and she was thrown through the windshield.
Clemmons family sued Four Winds for her injuries and wrongful death based on a negligent inspection of the bus. Four Winds tendered the claim to their insurance company in accordance with the terms of the policy. And Clemmons, the injury victim, offered to settle the case within the limits of the policy, which were $1 million dollars.
Now here is where the story should become simple – the insurance company investigates the claim, realizes that liability is pretty clear and that the damages if the case goes to trial would be huge, and takes the offer to settle the case within the policy limits, which is in the best interest of the insurance company’s insured as well as the injury victim’s family. Sounds reasonable and makes sense right? Wrong!
To make a long story short, the insurance company denied the claim based on the Products-Completed Operations Hazard exclusion that was written into the policy and which is standard in many CGL (commercial general liability) policies. Four Winds then assigned the plaintiffs’ its rights under the policy, which allowed the plaintiffs to go after the insurance company and they did.
The trial court, in reliance on Insurance Co. of North America v Electronic Purification Co. (1967) 67 Cal.2d 679, ruled that the exclusion clause at issue applies only to work performed on the insured’s “products.” Thus, it was inapplicable to the current case because Four Winds’ inspection of the bus was independent of its sale of the bus. Sounds reasonable to me, but not to the court of appeal.
The California Court of Appeal, Second Appellate District, Division Eight, reversed the trial court’s decision. The court of appeal distinguished the current case from the California Supreme Court’s long standing ruling in Insurance Co. of North America v Electronic Purification Co. by finding the exclusion at issue applied to either “‘your product’ or ‘your work’” read and defined separately. The court of appeal ignores the Supreme Court’s clear reasoning for reading those terms together and disregards forty years of jurisprudence on this matter.
The court’s opinion makes a mockery of the whole reason businesses buy policies and seek general liability coverage to begin with; to provide coverage for general liability including bodily injuries and wrongful death. The court simply casts aside the Supreme Court’s analysis in Electronic Purification regarding differing language for different terms in the contract as “not entirely dispositive.”
Put simply, the court read the language of the policy and determined that if insurance companies want to sell general liability policies that exclude general liability under nearly every scenario imaginable – no problem.
Democrats Must Pass Health Care Reform – For Injury Victims
January 26th, 2010As a San Francisco injury attorney, I see first hand and every day the differences in terms of care, recovery, and impact on a family that having health care insurance can mean for an injury victim. The Democrats in Congress need to focus and pass the insurance reforms and as much of a national health care policy as they can so that injury victims, families, and consumers are not harmed unnecessarily when they suffer an injury.
But what does health care reform and suffering a personal injury have to do with one another – let me explain.
As far as health care is concerned, injury victims and everyone else fall into one of two categories. You either have health insurance or you don’t. And if you do have it, chances are you have a insurance through your work. That is, your employer provides it or you have the ability and access necessary to purchase it in a group plan through your employer. Let’s call these folks the first group. In the second group, you simply don’t have health insurance at all.
But in the first group, your coverage is contingent on you working at that job or having the ability to purchase the same plan for a limited time or a private policy once you leave. Currently, there is virtually no portability of health insurance from job to job in the United States.
Well, here is what often happens when someone suffers a personal injury from the first group. Let’s say you work for a company in San Francisco. And let’s also assume that you are injured in a non-work related accident – a car accident, a trucking accident, a slip and fall accident or something of that nature.
Initially things are fine. You were injured, but you have coverage and you are getting the care you need. But what if your injury is serious and you are not able to return to work? Once your medical leave has run out and once it is clear you are no longer fit to perform your job, your company is going to terminate your employment. And if you can’t afford to purchase the coverage on your own – what do you do? Read the rest of this entry »
Tags: San Francisco injury attorney Brett A. Burlison comments on the need for Democrats to pass health care reform.
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