Key Takeaways
- California follows a comparative negligence system where fault can be allocated among multiple parties
- Commercial general liability policies in California must comply with filed rates under Proposition 103
- California has specific requirements for pollution liability disclosure and coverage
- Professional liability insurance has specific requirements for certain professions licensed by the state
- California limits on punitive damages apply to liability insurance claims
Last updated: January 2026
California General Liability Insurance
California has specific requirements for general liability insurance that agents must understand.
Comparative Negligence
California uses a pure comparative negligence system:
How It Works
- Fault is allocated among all parties
- Damages reduced by percentage of fault
- No minimum threshold to recover
- Even 99% at-fault plaintiff can recover 1%
Joint and Several Liability
California applies modified joint and several liability:
| Damage Type | Liability Rule |
|---|---|
| Economic Damages | Joint and several (each defendant liable for full amount) |
| Non-Economic Damages | Several only (each defendant liable for their share only) |
Commercial General Liability (CGL)
California CGL policies must comply with state requirements:
Required Elements
- Occurrence vs. claims-made coverage clearly disclosed
- Coverage territory defined
- Limits per occurrence and aggregate
- Defense costs inclusion/exclusion
- Pollution exclusion with disclosure
Rate Regulation
Under Proposition 103:
- Rates must be filed with CDI
- Prior approval required (or file-and-use with review)
- Rates must not be excessive, inadequate, or unfairly discriminatory
Professional Liability
California requires or regulates professional liability for various professions:
State-Mandated Coverage
| Profession | Requirement |
|---|---|
| Attorneys | Disclosure if no coverage |
| Architects | E&O required for state contracts |
| Engineers | E&O required for state contracts |
| Insurance Agents | Not mandatory but recommended |
| Real Estate Agents | Not mandatory but recommended |
Attorneys' Disclosure
California requires attorneys to disclose to clients if they do not carry professional liability insurance.
Pollution Liability
California has specific pollution liability requirements:
Disclosure Requirements
- Pollution exclusion must be disclosed
- Environmental impairment liability options explained
- Underground storage tank coverage requirements
- Cleanup cost coverage options
California Environmental Laws
- CERCLA (federal) and California equivalents apply
- Strict liability for hazardous waste
- Site cleanup requirements
- Disclosure requirements for property sales
Punitive Damages
California limits insurer payment of punitive damages:
General Rule
- Punitive damages generally NOT insurable in California
- Public policy prohibits insurance for intentional wrongdoing
- Some exceptions exist for vicarious liability
Exceptions
- Employer may be vicariously liable for employee's punitive damages
- Insurance may cover defense costs
- Umbrella policies may have varying treatment
Test Your Knowledge
Under California's pure comparative negligence system, what happens if a plaintiff is found 90% at fault?
A
B
C
D
Test Your Knowledge
In California, are punitive damages generally insurable?
A
B
C
D