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Insurance policies containing unambiguous language cannot be construed broadly, even if the proposed coverage could save lives and money down the line, the California Supreme Court ruled Thursday. The unanimous decision reversed an appellate ruling that said public safety required insurers to cover repairs to structures facing “imminent collapse” even if a policy strictly defines “collapse” as “actually fallen down or fallen to pieces.” “By failing to apply the plain, unambiguous language of the policy, the court of appeal erred,” Justice Janice Rogers Brown wrote for the court. Justice Carlos Moreno, joined by Justices Joyce Kennard and Kathryn Mickle Werdegar, concurred separately with the result, but disagreed with Brown’s holding that the court can never rewrite insurance contracts for public policy reasons — such as promoting safety so that homeowners don’t delay repairs to the point of creating hazards. “An insurance policy that clearly establishes a financial incentive to maintain a hazardous condition injurious to the public,” Moreno wrote, “may well be contrary to public policy.” In Rosen v. State Farm General Insurance Co., 03 C.D.O.S. 5038, Los Angeles County resident George Rosen had submitted a claim for the cost of repairing two decks attached to his home. State Farm refused, saying Rosen’s policy covered only structures that had “actually fallen down or fallen into pieces,” not those that were in a state of “imminent collapse.” L.A. County Superior Court Judge Soussan Bruguera sided with Rosen, saying coverage was required “irrespective of policy language.” L.A.’s Second District Court of Appeal agreed. “A requirement that an insurer provide coverage when collapse is imminent clearly is in the best interests not only of the insured and the insured’s visitors but also of the insurer,” the appeal court held. “Rectifying the problem prior to an actual collapse may well save lives and money.” In Thursday’s ruling, Justice Brown said that courts using the Second District’s logic “could convert life insurance into health insurance.” “To rewrite the provision imposing the duty to indemnify in order to remove its limitation to actual collapse,” she wrote, “would compel the insurer to give more than it promised and would allow the insured to get more than it paid for, thereby denying their freedom to contract as they please.” In his concurrence, Moreno noted that there are strong reasons for homeowners to repair rundown structures even if they’re only covered for an outright collapse. “These include the tort duty imposed on property owners not [to] injure others through their property’s hazardous conditions,” he wrote, “as well as the strong interest in keeping oneself, one’s family and persons invited onto one’s property free from harm.” State Farm’s lawyer, Pamela Dunn, said the ruling meant “a great day for all California businesses.” “The California Supreme Court has made clear that contract language, which means what it says, which is unambiguous, will be enforced by the courts,” the partner at Pasadena’s Dunn Koes said. “This is good for everybody in California that enters into contracts.” Her opponent, Santa Monica attorney Wayne Kreger, said the court’s ruling isn’t fair to the average person. “It ignores the disparity in bargaining power between the insurance industry and the consumer,” the Verboon, Milstein & Peter associate said, “and it basically says insurance carriers are free to include the most unconscionable and consumer-unfriendly provisions in their policies as long as they’re unambiguous. “Individual consumers and policyholders,” he added, “are powerless to do anything about it.”

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