California Department of Insurance Files Amicus Brief in Heckart v. A-1 Storage
On September 12, 2017, the California Department of Insurance, in a reversal of its previous and long-standing legal position, filed a brief with the California Supreme Court expressing its opinions on the legal issues involved in the Heckart case, which is currently before the California Supreme Court. The specific issue before the Court is: Does a self-storage facility’s storage rental agreement offering an addendum under which the facility assumed liability for damage to stored property constitute insurance subject to regulation under the Insurance Code when the principal object of the agreement between the parties was the rental of storage space rather than the shifting and distribution of risk?
The underlying trial court and the California Court of Appeal (4th App. Dist., Div 1) answered this question in the negative and determined that the rental agreement and addendum at issue in Heckart do not constitute insurance subject to regulation under the Insurance Code. These determinations are in line with other cases in which courts have long affirmed the right of contracting parties to allocate risk within their agreements when incidental to the principal object of such agreements.
Deans & Homer developed the concept of the “Protection Plan” for the self-storage industry after consultation with the legal division of the California Department of Insurance.
Deans & Homer respectfully disagrees with opinions expressed by the California Department of Insurance in its amicus brief and it strongly believes that the fundamental legal tenets that led to the development of this program are valid. Deans & Homer continues to believe that the protection program does not constitute insurance.