Hunton Insurance Recovery Blog

The recent California federal court decision Scottsdale Ins. Co. v. Beachcomber Mgmt. Crystal Cove, LLC, et al. illustrates the perils that corporate policyholders may face in obtaining the full benefit of the bargain when they procure new D&O insurance after making a claim under a prior policy.  2025 WL 257599, at *13 (C.D. Cal. Jan. 21, 2025).  In Scottsdale, the court agreed that an insurer who sold a D&O policy could deny coverage for a lawsuit filed against two corporate executives during its policy period because that lawsuit involved some of the same allegations of wrongdoing as did a claim the policyholder previously submitted to a former D&O insurer.  The new policy contained a very broadly worded “prior notice exclusion” that barred coverage for all claims “in any way involving” any wrongful conduct, facts, circumstances, or situations as to which notice had been given to a prior D&O insurer.