Dignity Housing West is a California nonprofit that provides low-income housing. Describing itself as a housing developer and listing its only premises as 200 square feet of office space, it applied for and obtained a commercial general liability insurance from A Tain Specialty Insurance In Atain Specialty Insurance Company v. Dignity Housing West, Inc. a California nonprofit corporation No. 21-15127, United States Court of Appeals, Ninth Circuit (December 3, 2021) the Ninth Circuit dealt with a claim seeking defense and compensation for a loss on a property that was not identified at the time the insurance was acquired.
Although the application asked if Dignity carried out any "accommodation business including flats", Dignity did not disclose the three apartment buildings it owned or maintained.
After a fatal fire broke out in Dignity's apartment building in San. Pablo Avenue in Oakland, Dignity was named in several trials by former tenants. Atain initially defended Dignity in these acts, but later withdrew.
Atain sued for a statement that the policy did not cover the San Pablo building. The district court issued a speedy judgment in Atain's favor and concluded that the insurance did not cover the apartment building and that even if it did, omissions in Dignity's application gave Atain the right to cancel the insurance
On Dignity's insurance application, it revealed only 200 square feet of office space and represented that it was a tenant. On the page with additional declarations of general responsibility for commercial rights in the policy, the space is stated as the only premises that Dignity owns, rents or occupies.
A Dignity official stated in a deposit that Dignity actually owned the building where the office was located and the apartment where the fire occurred.
The ninth district made it clear that information in insurance declarations governs the scope of insurance coverage. If the declarations indicate that the insurance does not cover, "no further revision of the insurance is necessary." [ Fidelity & Deposit Co. v. Charter Oak Fire Ins. Co. 78 Cal.Rptr.2d 429, 432 (Cal.Ct.App. 1998).]
Since nothing in the declaration supports the view that the policy applied to any of Dignity's three secret apartment buildings, the insurance did not cover San Pablo-
The premium paid by Dignity further supports the conclusion that the coverage is limited to its offices. Dignity paid $ 360 to receive commercial general liability protection for one year. An annual premium of $ 360 could not reasonably be expected to pay for a general liability insurance policy for dozens of apartments in three separate buildings.
Dignity also claims that Atain acted in bad faith when it refused to accept the claimant's settlement offer.
] However, California law makes it clear that if there is no potential for coverage, no action can be taken against the implied breach of good faith and fair treatment. [ Waller v. Truck Ins. Exch., Inc. 900 P.2d 619, 639 (Cal. 1995).]
Because the insurance did not cover the San Pablo building, Atain did not act in bad faith when it did not accept the settlement offer.
To and with the ninth circuit, it was easy to conclude that there could be no coverage for the liability exposure in an apartment building owned and operated by the insured that was neither disclosed nor identified at the time of the insurance. Although termination was appropriate, the ninth district found it easier to deny coverage of the contract. Attain should immediately, if the insurance is still in force, notify Dignity that the insurance is canceled and return the premium to avoid further exposure. No insurer should insure any person or entity who has fraudulently obtained the insurance. , bad faith and insurance fraud almost equally for insurers and policyholders.
He also acts as arbitrator or media
for insurance-related disputes. He practiced law in California for more than 44 years as a lawyer for insurance coverage and claims management and more than 54 years in the insurance industry.
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