Orange County attorneys cover insurance coverage denials trends
D&O Insurance practice group leader and Orange County partner Terry McInnis and Orange County associate Melissa Perez had their article “ A trend of coverage denials under D&O and professional liability policies for contractual liability claims” appear as the lead article in the October 12 edition of Thomson Reuters’ Westlaw Journal Insurance Coverage.
In the article, McInnis and Perez analyze recent court decisions (e.g., August Entertainment, Health Net, Sauter and WellPoint) upholding coverage denials under directors and officers policies and professional liability policies for claims based on contractual liability. They then discuss the implications of these recent cases (e.g., “negligence” and “wrongful act,” “moral hazard,” etc.).
“Expect the recent trend of courts rejecting coverage for breach-of contract claims to continue,” the duo state in their conclusion. “Clear precedent indicates that there is no potential for coverage for a policyholder’s non-payment of its preexisting contractual obligations, including defense costs (absent an express grant of coverage in the policy), plaintiffs’ attorney fees and interest for such claims. Thus, it can be expected that insurers, both in California and other jurisdictions, will rely upon these decisions, and in particular the Health Net decision, to disclaim coverage for contractual damage claims involving defense and indemnity.”