{"id":893399,"date":"2017-12-21T12:06:21","date_gmt":"2017-12-21T19:06:21","guid":{"rendered":"https:\/\/www.myconstructionexpert.com\/blog\/?p=893399"},"modified":"2017-12-21T12:06:21","modified_gmt":"2017-12-21T19:06:21","slug":"california-court-broadly-interprets-insurance-policys-liability-arising-language","status":"publish","type":"post","link":"https:\/\/www.myconstructionexpert.com\/blog\/california-court-broadly-interprets-insurance-policys-liability-arising-language\/","title":{"rendered":"California Court Broadly Interprets Insurance Policy\u2019s \u201cLiability Arising Out of\u201d Language"},"content":{"rendered":"<p>Gary Barrera | <a href=\"https:\/\/calconstructionlawblog.com\/2017\/12\/18\/california-court-broadly-interprets-insurance-policys-liability-arising-out-of-language\/\" target=\"_blank\">California Construction Law Blog<\/a> | December 18, 2017<\/p>\n<p>In\u00a0<em>McMillin Mgmt. Servs. v. Financial Pacific Ins. Co.<\/em>,\u00a0Cal.Ct.App. (4th Dist.), Docket No. D069814 (filed 11\/14\/17), the California Court of Appeal held that the term \u201cliability arising out of,\u201d as used in an ongoing operations endorsement, does not require that the named insured\u2019s liability arise while it is performing work on a construction project.<\/p>\n<p>In the\u00a0<em>McMillin<\/em>\u00a0case, the general contractor and developer (McMillin) contracted with various subcontractors, including a concrete subcontractor and stucco subcontractor insured by Lexington Insurance Company.\u00a0 Both subcontractors performed their work at the project prior to the sale of the units.<\/p>\n<p>The Lexington policies contained substantively identical additional insured endorsements that provided coverage to McMillin \u201cfor liability arising out of your [the named insured subcontractor\u2019s] ongoing operations performed for [McMillin].\u201d Several homeowners filed suit against McMillin, alleging that they had discovered various defective conditions arising out of the construction of their homes, including defects arising out of the work performed by Lexington\u2019s insureds.\u00a0 Lexington argued that there was no potential for coverage in McMillin\u2019s favor under the endorsements because there were no homeowners during the time that the subcontractors\u2019 operations were performing work at the project (the homes closed escrow after the subcontractors had completed their work); thus, McMillin did not have any liability for property damage that took place while the subcontractors\u2019 operations were ongoing.<\/p>\n<p>The court rejected Lexington\u2019s argument, noting that the endorsements stated that Lexington would provide coverage to McMillin for liability \u201carising out of\u201d ongoing operations, and that the term \u201carising out of\u201d is not synonymous with \u201cduring.\u201d The court opined that \u201carising out of\u201d required only a \u201cminimal causal connection or incidental relationship\u201d between McMillin\u2019s liability and the subcontractors\u2019 ongoing operations, and that the lack of homeowners during the subcontractors\u2019 ongoing operations did not rule out the possibility that McMillin could suffer liability arising out of the subcontractors\u2019 ongoing operations. The court also held that Lexington failed to establish that all of the damage occurred after the ongoing operations were completed; and that under the plain language of the endorsements, if property damage occurred before the ongoing operations were completed, the additional insured was entitled to coverage.<\/p>\n<p><em>McMillin<\/em>\u00a0is another example of the recent trend by the California Court of Appeal in expanding the scope of coverage under ongoing operations endorsements in favor of developers and general contractors, as evidenced by the court\u2019s August 2017 ruling in\u00a0<em>Pulte Home Corp. v. American Safety Indemnity Co.<\/em>, 14 Cal.App.5th 1086 (2017).\u00a0 Nevertheless, developers and general contractors would be well-advised to carefully review additional insured endorsements to confirm that the language of the endorsements is consistent with their expectations of coverage and contain no language that requires the named insured\u2019s liability to arise during the course of the named insured\u2019s ongoing operations as a prerequisite to coverage.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Gary Barrera | California Construction Law Blog | December 18, 2017 In\u00a0McMillin Mgmt. Servs. v. Financial Pacific Ins. Co.,\u00a0Cal.Ct.App. (4th Dist.), Docket No. D069814 (filed 11\/14\/17), the California Court of Appeal held that the term \u201cliability arising out of,\u201d as used in an ongoing operations endorsement, does not require that the named insured\u2019s liability arise&hellip; <a class=\"more-link\" href=\"https:\/\/www.myconstructionexpert.com\/blog\/california-court-broadly-interprets-insurance-policys-liability-arising-language\/\">Continue reading <span class=\"screen-reader-text\">California Court Broadly Interprets Insurance Policy\u2019s \u201cLiability Arising Out of\u201d Language<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false},"version":2}},"categories":[9914],"tags":[9895,12,10237,10328],"class_list":["post-893399","post","type-post","status-publish","format-standard","hentry","category-insurance-coverage","tag-advise-consult","tag-construction","tag-liability","tag-operations-endorsement","entry"],"jetpack_publicize_connections":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v25.0 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>California Court Broadly Interprets Insurance Policy\u2019s \u201cLiability Arising Out of\u201d Language - Advise &amp; 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