Court of Appeal Answers Important Insurance Coverage Question Regarding Additional Insureds

In Transport Insurance Co. v. Superior Court (, the Court of Appeal took on and clarified an important question with respect to insurance coverage.  In that case, the Court addressed an ambiguous term in an insurance policy.  Under California law, ambiguities are generally resolved in favor of the insured's objectively reasonable expectations.  In this case, the named insured on the policy had already prevailed against the insurer on the ambiguous term based on the named insured's reasonable expectations.  An additional insured listed on the policy then sought to use that earlier ruling to prevail under principles of collateral estoppel with respect to the meaning of the policy.  The Court of Appeal reversed the trial court ruling in favor of he additional insured, ruling that the additional insured had to establish its own objectively reasonable expectations in order to prevail.  Thus, the Court held that with respect to additional insureds, in interpreting ambiguous policies, each insured's expectations must be examined.  Accordingly, an ambiguous term could be interpreted differently with respect to different insureds on the very same policy.  Thus, an additional insured and the insurer are not necessarily bound by interpretations procured in litigation between the named insured and the insurance carrier.