D&O Issues: Lloyd's Not Liable for Defense Costs; Did Not Consent to Settlement

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December 03, 2009

In Safeco Insurance Co. of America v. Certain Underwriters at Lloyd’s, London, Case No. BC378070 (Cal. Super. Ct. September 30, 2009), the Los Angeles County Superior Court granted summary judgment to defendants Certain Underwriters at Lloyd’s, London and New Hampshire Insurance Co. (NHIC), holding that Lloyd’s and NHIC did not have to pay Safeco Insurance Company more than $1 million in defense costs.

The underlying action involved a personal injury case brought against Safeco, which Safeco settled without obtaining the carriers’ written consent. The D&O insurance policy in question contained a “no-voluntary-payment” clause. The facts demonstrated that Safeco failed to notify the carriers of the settlement and failed to seek the carriers’ consent before entering into the settlement. Accordingly, the court found that the defendants were entitled to judgment as a matter of law and were excused from providing coverage.

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