In Heckart v. A-1 Self-Storage, Inc., the Supreme Court today holds that a self-storage company’s agreement to assume limited liability for a tenant’s damaged property, in exchange for an additional monthly payment, is not subject to regulation under California’s Insurance Code. This despite allegations an insurance underwriter, agent, and broker designed the agreement for the defendant self-storage company and told the company that it could charge higher rates than approved by California’s Department of Insurance and also avoid additional administrative costs required if the company sold a licensed insurance product.
The court’s unanimous opinion by Chief Justice Tani Cantil-Sakauye reasons that “the indemnification agreement is incidental to the principal object and purpose of renting storage space.” Also, rejecting an argument made by California’s Insurance Commissioner, an invited amicus curiae, the court concludes that a portion of the Insurance Code regulating the sale of insurance by self-service storage facilities as agents for licensed insurers is inapplicable because the defendant company was “not acting as an agent for an insurer.”
The court affirms the Fourth District, Division One, Court of Appeal.
