CALIFORNIA GOES TO TEXAS: THE INSURANCE CONSEQUENCES OF CALIFORNIA’S ADOPTION OF A PRIVATE RIGHT OF ACTION AGAINST FIREARMS MANUFACTURERS, DISTRIBUTORS AND SELLERS
Andrew B. Downs
On July 22 California Governor Newsom signed SB 1327 which creates a private right of action for members of the public who wish to sue manufacturers, distributors, and retailers of firearms. The law will take effect January 1, 2023. This law is part of California’s reaction to Texas’ enactment of a law which allowed private rights of action against abortion providers and mirrors the Texas law, only this time it targets the manufacturers, distributors, and sellers of what are commonly referred to as assault weapons, instead of abortion providers.
If all legislation has unintended consequences, this statute has many unintended consequences, regardless of an individual’s personal opinions regarding firearms (or reproductive health issues). One of those areas of unintended consequences is insurance.
It’s fairly clear the legislature was not thinking about insurance when it enacted SB 1327. There is nothing in the statute to either encourage or prohibit liability insurance policies from covering SB 1327 claims. While the language of individual policies will control, it is unlikely common Commercial General Liability policies will provide either a duty to defend or a duty to indemnify for claims under the statute because a 1327 claim will not involve allegations of bodily injury, property damage, or advertising or personal injury. In addition, there are likely to be issues concerning California Insurance Code § 533, the prohibition of indemnity for willful acts. Despite these hurdles, liability insurers should expect to receive tenders of defense from defendants sued under SB 1327.