AB 3040

Bill Subjects

Liability Policies Lawsuits

Abstract

Existing law generally regulates classes of insurance, including liability insurance. Existing law generally regulates provisions in liability insurance policies and sets forth requirements for lawsuits filed as a result of injury covered by a liability insurance policy. Under existing caselaw, a "suit" or "lawsuit" as used in a liability insurance policy is construed against the insurer to protect the insured's reasonable expectation of coverage, and therefore those terms include administrative adjudications. This bill would codify that existing caselaw by specifying that, in addition to a lawsuit filed in a court of law, a "suit" or "lawsuit" as those terms are used in a liability insurance policy include an order, directive, mandate, requirement, or other regulatory enforcement action or agreement by any federal, state, or local agency with jurisdiction to enforce environmental laws or regulations requiring an insured party to take action with respect to contamination within the state. The bill would ensure this definition does not apply if its application is contrary to the intent of the parties to the policy.