Coverage Analysis
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BURDEN OF PROOF

Once an insured shows that an event falls within scope of coverage, the burden shifts to the insurer to demonstrate that the claim is specifically excluded. Merced Mutual Ins. Co. v. Mendez, 213 Cal. App.3d 41, 261 Cal. Rptr. 273 (5th Dist. 1989) and Continental Cas. Co. v. Fibreboard Corp., 762 F.Supp. 1368 (N.D. Cal. 1991).   See also Searle v. Allstate Life Ins. Co., 38 Cal.3d 425, 437 (1985) and State Farm Fire & Cas. Co. v. Martin, 872 F.2d 319 (9th Cir. 1989).  

The Court of Appeals has ruled that this same rule applies to the question of whether injury was expected or intended by the insured.  FMC Corp. v. Plaistead & Companies, 72 Cal. Rptr.2d 467, 480 (1998), review denied, No. S045520 (Cal. May 27, 1998).

As Section 533 functions as an exclusion, insurers have been held to bear the burden of proving its application.  Klemer v. Hartford Insurance Company, 22 Cal. 3d 865, 879 (1978). 

The California Supreme Court ruled 4-3 that a policyholder has the burden of proving the “sudden and accidental” exception to the pollution exclusion, at least as regards the duty to indemnify.  In  Aydin Corp. v. First State Ins. Co., 77 Cal.Rptr.2d 537, 959 P.2d 1213 (1998) the court declared that this was in keeping with the burden of establish coverage and made sense, as the insured was more likely to have the information available to satisfy this burden.  The court did not reach the question of whether or how this rule would apply to the duty to defend.  Several earlier lower court rulings had declared that Montrose I requires a defense unless the insurer can prove the impossibility of a “sudden and accidental” release.   Reese v. The Travelers Ins. Co., 129 F.3d 1056 (9th Cir. 1997) and Vann v. Travelers Companies, 39 Cal. App. 4th 1610, 46 Cal. Rptr.2d 617 (1st Dist. 1995).

A party seeking to recover under an insurance policy has the burden of under California law of establishing the existence of a policy naming them as an insured.  Executive Aviation, Inc. v. National Insurance Underwriters, 16 Cal. App. 3rd 799, 806 (1971).  

Where an insurance policy has been lost, its contents may be proved through secondary evidence.  Rogers v. Prudential Ins. Co., 218 Cal. App.3d. 1132, 1137 (1990); Evidence Code Section 1500, 1505.  It is the insured's burden to prove the issuance and terms of a missing policy.  IMCERA Group, Inc. v. Liberty Mutual Ins. Co.,  47 Cal. App.4th 699, 50 Cal. Rptr.2d 583 (2d Dept. 1996), review granted, 917 P.2d 1164 (Cal. May 22, 1996), appeal dismissed (Cal. 1997). The insured may not prove the policy's contents verbatim, proof of the substance is sufficient.  Seaboard National Bank v. Ackerman, 16 Cal. App. 55, 58 (1911), cited in IMCERA, supra. 

In Zero Corp. v. Employers Ins. of Wausau, No. 94-3164 (C.D. Cal. October 14, 1997) the U.S. District Court held that unauthenticated certificates of insurance were insufficient to establish the existence and terms of these policies.  In such circumstances, the court ruled that the evidence must establish "the subject matter of insurance, the amount and elements of the risk, including its duration and point of time and extent in point of hazard assumed, the rate of premium and generally all the circumstances which are pertinent to the contract and distinguish it from every other."  Citing, Dutton Dredge Co. v. USF&G, 136 Cal. App. 574, 576 (1934).  

Speculative testimony by an insurance broker that he though that his agency that an insured had purchased coverage from a carrier was held insufficient to satisfy the insured’s burden in Wong v. Globe Indemnity Co., No. CO28154 (Cal. App. January 28, 1999).  The court suggested, however, that an insurer seeking to avoid coverage on this basis must separately establish that it could not locate copies in its own archives despite a diligent search.
 
California courts have not yet conclusively addressed whether proof of a missing policy must be by a standard of clear and convincing evidence or a preponderance of the evidence.  In IMCERA, the California Court of Appeal affirmed a lower court's finding that secondary evidence obtained from Liberty Mutual describing the general scope of coverages that it underwrote nationally during the period in question were insufficient to establish the terms and conditions of the missing policies.  These rulings have rejected the use of a strict "clear and convincing" standard, holding instead that it is sufficient that the terms be established by a "preponderance of the evidence."  National American Ins. Co. of Calif. v. Certain Underwriters at Lloyd's, London, 95 F.3d 529, 534 (9th Cir. 1996); Four Star Oil and Gas Co. v. Allianz Underwriters Insurance, Case No. BC036944 (Cal. Super. June 22, 1995).

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