Callahan & Blaine, PC’s Managing Partner Edward Susolik will speak at the Orange County Bar Association Insurance Law Section’s Annual Year in Review seminar on November 13, 2025. The program brings together leading insurance law practitioners to examine the most significant case law developments affecting California insurance disputes.
Joining Susolik on the panel is Honorable Rex Heeseman (Ret.) from JAMS, Phillip E. Smith from Smith Smith & Feeley LLP, and Stephen E. Smith from Smith Smith & Feeley LLP. The discussion addresses recent court decisions and emerging issues that are reshaping how California courts interpret policies, apply exclusions, and decide coverage disputes.
Key Insurance Law Developments Shaping California Practice
The seminar addresses seven critical areas of insurance law that have seen significant development through recent court decisions. These topics reflect the issues insurance practitioners encounter regularly and provide essential updates for attorneys handling coverage disputes.
Policy Interpretation and the “Illusory Coverage” Doctrine
Courts continue to refine how they approach policy interpretation when exclusions threaten to eliminate coverage entirely. The “illusory coverage” doctrine prevents insurers from using overly broad exclusions that would render policies meaningless. Recent decisions have clarified when this doctrine applies and how courts balance enforcing policy language against ensuring insurance provides real protection.
This doctrine has particular relevance in business litigation contexts where commercial policies often contain multiple exclusions. California courts consistently hold that policies must be interpreted to give effect to the coverage purchased, not just the exclusions drafted by insurers.
Sexual Abuse and Molestation Exclusions
Sexual abuse and molestation exclusions have become increasingly significant in commercial liability policies. These cases often involve organizations facing claims related to abuse by employees or volunteers. The key legal question is whether these exclusions bar coverage for all related claims or only for intentional acts of abuse.
Recent court decisions have examined the distinction between claims alleging direct participation in abuse and claims based on negligent hiring, supervision, or retention. This distinction determines whether an organization can access insurance coverage when defending allegations it failed to prevent abuse.
Delivery Exclusions in Automobile Coverage
The rise of gig economy delivery services has brought delivery exclusions into sharp focus. Traditional automobile insurance policies often exclude coverage when vehicles are used for commercial delivery purposes. However, the explosion of food delivery apps and package delivery services has created questions about when these exclusions apply.
Courts are examining whether occasional delivery work triggers these exclusions or whether regular commercial use is required. For individuals injured in car accidents involving delivery drivers, these coverage questions can significantly affect available recovery options.
Agent and Broker Liability for Inadequate Coverage
Insurance agents and brokers in California have professional duties to recommend adequate coverage based on their clients’ needs. Recent catastrophic events, particularly wildfires, have exposed situations where property coverage limits proved insufficient. Courts have developed standards for when agents and brokers can be held liable for recommending inadequate limits.
These cases examine whether the agent or broker conducted adequate assessments of property values and replacement costs, and whether they properly explained coverage limitations. The duty to procure adequate coverage has significant implications for both insurance professionals and property owners.
The “Direct Physical Loss or Damage” Requirement
Property insurance policies typically require “direct physical loss or damage” to trigger coverage. This language has generated substantial litigation over what constitutes physical loss or damage. Courts have addressed this requirement in contexts including business interruption claims and situations where the physical nature of the loss is disputed.
The interpretation of this requirement can determine whether multimillion-dollar claims are covered or denied entirely. Recent decisions have examined whether certain types of damage or loss meet the physical requirement.
Brandt Attorney Fees
California Insurance Code Section 2860, known as the Brandt fee statute, allows policyholders to recover attorney fees when an insurer defends a claim under a reservation of rights. This statute has generated case law regarding when fees can be recovered, how they should be calculated, and what documentation is required.
These cases have particular significance in insurance litigation because they affect the financial dynamics of coverage disputes. When insurers defend under reservations of rights, policyholders may be entitled to independent counsel at the insurer’s expense.
Recent Statutory and Supreme Court Developments
California has implemented changes to minimum automobile liability insurance requirements, reflecting increased medical costs and property values. These updates affect all California drivers and have implications for personal injury claims and coverage disputes.
Additionally, several insurance cases currently before the California Supreme Court could establish precedents affecting coverage disputes statewide. These cases address fundamental questions about policy interpretation, the duty to defend, and bad faith liability.
Work with California’s Leading Insurance Litigation Firm
For 40 years, Callahan & Blaine, PC has achieved record-breaking results in California insurance law. Managing Partner Edward Susolik has handled over 1,500 mediations and brings unparalleled knowledge to complex coverage disputes, bad faith litigation, and professional liability cases. The firm secured the largest insurance bad faith judgment in Orange County history at $58 million and the largest jury verdict in Orange County history at $934 million in a complex business litigation case. Our 29 trial attorneys each bring a minimum of eight years of litigation experience, with most having 15 to 30 years in the courtroom.
Insurance disputes turn on nuanced questions of policy language, case precedent, and strategic judgment. Whether you are a policyholder fighting for coverage, an insurer defending against bad faith allegations, or an agent or broker facing professional liability claims, the right legal team makes the difference between favorable outcomes and costly defeats. Contact our firm to discuss your insurance law matter with attorneys who have four decades of experience in California’s most challenging coverage disputes.
