AdvocateAug14issuebksv4_Advocatetemplate2007.qxd7/21/20146:27PMPage40
Loss-of-Rents Coverage — continued
must be so stated as clearly to aprise the insured of its effect.” Thus, “the burden rests upon the insurer to phrase exceptions and exclusions in
clear and unmistakable language.” The exclusionary clause “must be conspicuous, plain and clear.”’ This rule applies with particular force when the cover-
age portion of the insurance policy would lead an insured to reasonably expect coverage for the claim purportedly excluded. If the court in evaluating policy language considers the issue to be a “close call,” then the limitations must be construed against the insurer. It does not create a triable issue of fact, because the issue of policy interpretation is not a factual issue. It is a legal issue to be decided by the Court. (Waller v. Truck Ins. Exchange, Inc. (1995) 11 Cal.4th 1, 18.) Any uncertainty as to the enforceability of an insurance company’s claimed restrictions on coverage must result in a finding against its enforceability. If Folksamerica had wanted to limit coverage in its policy for loss of rents only to those situations where there is a signed lease with a tenant in effect at the time of the loss, then the policy should have stated that loss of rents and other expense is excluded unless the insured has entered into a written lease with a tenant prior to the date of the physical loss to the building. The policy did not contain that language.
Conclusion
Loss of rents provisions provide coverage when a commercial building can no longer be rented due to covered physical damage to the building – even if (a) there is no tenant in the building at the time of the loss, or (b) the building is not currently lease to anyone. The loss of the opportunity to lease the building is enough for coverage. Christian J. Garris has specialized in all aspects of insurance bad-faith litigation for over 16 years. He has obtained numerous multi-million dollar settlements for his clients in the fields of life, health, property/casualty, and disability insurance. He graduated with honors from Claremont McKenna College in 1991 and obtained his J.D. from Santa Clara University in 1994. He founded the Law Offices of Christian J. Garris in Los Angeles in 2004. He is a member of the Consumer Attorneys of Los Angeles.
40 — The Advocate Magazine
AUGUST 2014