Hinshaw partner Scott Seaman is the exclusive attorney and legal source cited throughout a new InsuranceNewsNet article that examines the California Supreme Court\u2019s influential ruling in Fox Paine & Company v. Twin City Fire Insurance Company. The decision clarifies policyholders\u2019 rights to file claims against excess insurers without first exhausting underlying coverage.<\/p>\n
Significance and Clarification from the Ruling<\/p>\n
At its core, the Fox Paine decision clarifies that policyholders are not required to fully exhaust underlying insurance before seeking judicial intervention against excess carriers. As Scott explains: \u201cIn this case, the California Supreme Court ruled that policyholders can seek declaratory relief from their excess insurers and assert bad faith claims even where the underlying insurance has not yet been exhausted.\u201d<\/p>\n
While the decision does not change existing rules, it provides meaningful clarification on the threshold required for court involvement. Rather than meeting the higher burden of a breach-of-contract claim, Scott notes that \u201cin this context, a \u2018reasonable likelihood\u2019 may be sufficient enough to bring an issue before a court.\u201d This distinction could prevent policyholders from having to file separate lawsuits every time they transition from one layer of coverage to the next.<\/p>\n
Guidance for Excess Insurers<\/p>\n
For excess insurers, the ruling signals that a wait-and-see approach may no longer be the safest strategy. \u201cWhen the excess policy is reasonably likely to be involved, the excess insurer may benefit from playing some role in the litigation process early on rather than sitting on the sidelines and waiting to be presented with a cake that is already baked,\u201d Scott advises. In other words, early and active engagement may better serve insurers than remaining passive until coverage is triggered.<\/p>\n
Scope of the Decision<\/p>\n
Lastly, Scott clarifies, \u201cImportantly, this is a pleading decision, not a merits decision.\u201d The court addressed what a policyholder must allege to bring a dispute before a judge\u2014not whether an excess insurer actually breached its policy or owes coverage.<\/p>\n
For advisors and their clients, this means the door to challenging potential coverage issues is now open earlier in the process, but the burden of proving that a loss could reach an excess layer remains.<\/p>\n","protected":false},"excerpt":{"rendered":"Hinshaw partner Scott Seaman is the exclusive attorney and legal source cited throughout a new InsuranceNewsNet article that…\n","protected":false},"author":2,"featured_media":430928,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[6],"tags":[7,9,8,145230],"class_list":["post-430927","post","type-post","status-publish","format-standard","has-post-thumbnail","category-california","tag-california","tag-california-headlines","tag-california-news","tag-hinshaw-culbertson-llp"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/posts\/430927","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/comments?post=430927"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/posts\/430927\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/media\/430928"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/media?parent=430927"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/categories?post=430927"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/tags?post=430927"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}