California Corner: California’s Bar on Coverage for Willful Acts under Insurance Code Section 533—Don’t Assume It Applies

David A. Thomas and Linda Kornfeld

Like a number of states, California prohibits insurers from indemnifying policyholders for liability based on intentional conduct that was committed with the intent to cause harm, although it does not bar a defense against such claims. California’s public policy is codified in Insurance Code Section 533, which provides: “An insurer is not liable for a loss caused by the wilful act of the insured; but he is not exonerated by the negligence of the insured, or of the insured’s agents or others.”

A significant body of law has elucidated the rules for application of Section 533. Reckless or grossly negligent conduct generally does not trigger application of the statute.[1] Nor, with very limited exceptions, does the mere fact that a policyholder intended the act that caused the harm bring the conduct within Section 533.[2] Instead, the policyholder must have intentionally performed a liability-producing act for the express purpose of causing harm or with knowledge that harm was highly probable or substantially certain to result.[3] Fraud and malicious prosecution are common examples.[4] Section 533, however, does not bar coverage for intentionally harmful acts based solely on vicarious liability.[5] Continue reading “California Corner: California’s Bar on Coverage for Willful Acts under Insurance Code Section 533—Don’t Assume It Applies”

California Corner: California Passes Historic Privacy Law: What to Consider Now to Reduce Future Financial Exposure

Jennifer J. Daniels and Linda Kornfeld

On June 28, 2018, California passed a historic privacy bill (AB 375) that mirrors some of the privacy obligations that recently came into effect in Europe under the General Data Protection Regulation (“GDPR”). The new California Consumer Privacy Act of 2018 (the “Act”) will go into effect on January 1, 2020. The new law requires greater transparency in information practices and gives individuals powerful new rights with respect to their personal information. Complying will be a challenge for many American businesses, in particular those that have not had to grapple with GDPR. Continue reading “California Corner: California Passes Historic Privacy Law: What to Consider Now to Reduce Future Financial Exposure”

GDPR Is Finally Here: It’s Time to Make Sure Your Current Cyber Policy Will Protect against New Financial Exposures

Linda Kornfeld

The General Data Protection Regulation (“GDPR”) goes effective tomorrow. Companies are considering the consequences and attempting to determine whether they are compliant or how to get there, whatever “compliant” ultimately will be determined to mean as time progresses under GDPR. In considering the consequences of failure to comply, companies are, or should, also be thinking about whether they can transfer risk, including to insurance, and whether their current insurance policies will do the trick. Many companies now have cyber insurance, but cannot presume that their current cyber policy will protect against GDPR exposures. So, as we welcome in GDPR, the internal corporate conversation should include discussion of whether existing cyber policies are enough, or what needs to be done to fortify insurance protection against unknown future GDPR financial exposures.

Things to consider now: Continue reading “GDPR Is Finally Here: It’s Time to Make Sure Your Current Cyber Policy Will Protect against New Financial Exposures”

Insurance Can Reduce the Financial Repercussions to Your Supply Chain of Superstorms, Wildfires, Climate Change, and Global Economic Disruptions

Welcome to “California Corner,” dedicated to posts authored by our new team of Insurance Recovery attorneys based in our Los Angeles office. Partner Linda Kornfeld, who serves as vice chair of the Insurance Recovery group, Partner David Thomas and Of Counsel Julia Holt focus on national and California-specific issues, including property and weather-related business interruption issues, data breach and privacy issues, and professional liability, asbestos, and environmental liabilities. Their clients include telecommunications companies, universities, real estate developers, manufacturers, and nonprofit organizations around the country. We hope you find their perspectives informative and insightful!

Linda Kornfeld, David Thomas, and Julia Holt

Many companies in today’s global economy are dependent upon the efficient and disruption-free operation of their multinational supply chains. Unfortunately, such supply chains are vulnerable to numerous physical and non-physical elements, including natural disasters, information technology failures, cyberattacks, pandemics, climate change, and civil and political unrest. These vulnerabilities can, and often do, result in the disruption of business operations resulting in significant financial losses. Continue reading “Insurance Can Reduce the Financial Repercussions to Your Supply Chain of Superstorms, Wildfires, Climate Change, and Global Economic Disruptions”