Insurance Law and Insurance Regulation

Two recent appellate decisions demonstrate critical limits on insurance companies' attempts to deny coverage through exclusions and defenses. The Pennsylvania Supreme Court rejected insurers' effort to create a judicially-imposed exclusion for sex trafficking claims that was never written into their policies, while a New Jersey court reinforced that insurers—not policyholders—bear the burden of proving exclusions apply.

In a huge victory for policyholders in the Golden State, the California Supreme Court has confirmed that policyholders may proceed with declaratory relief and bad faith claims against excess insurers without pleading actual exhaustion of underlying policy limits.

The Delaware Superior Court recently issued a significant ruling on insurance coverage for SEC disgorgement, determining that such payments are neither automatically excluded as civil penalties nor categorically uninsurable under Delaware law. This decision has important implications for directors and officers liability insurance policies and the scope of coverage available for regulatory enforcement actions. The court's analysis focused on specific policy language and established legal principles governing