By: Ravi R. Mehta and Katherine J. Flores
May 10, 2016
In general, insurers are permitted to limit the risks they assume through provisions within the policy terms. For example, many policies attempt to preclude coverage in instances where another insurance policy providing for defense is available to the insured. California courts generally disfavor these types of “other insurance” or “escape” clauses based on public policy concerns. In two recent decisions, the California Court of Appeal found such clauses unenforceable.
In Underwriters of Interest Subscribing to Policy Number A15274001 v. ProBuilders Specialty Insurance, Co. (2015) 241 Cal.App.4th 721, Plaintiff, Underwriters of Interest Subscribing to Policy Number A15274001 (“Underwriters”), insured Pacific Trades Construction & Development, Inc. (“Pacific Trades”). Additionally, ProBuilders Specialty Insurance Company (“ProBuilders”) insured Pacific Trades.