Insurance carriers frequently argue that when insureds face claims for “disgorgement” or “restitution,” they need not defend or indemnify under a wide-range of liability policies. Carriers argue that, at least
Coverage for 'Restitution' Claims, Public Policy Notwithstanding
Insurance carriers frequently argue that when insureds face claims for "disgorgement" or "restitution," they need not defend or indemnify under a wide-range of liability policies. Carriers argue that, at least in California, public policy bars coverage for such claims including claims alleging failure to pay employees overtime, failure to pay taxes and penalties, and, in the intellectual property area, for disgorgement of "ill-gotten gains" or payment of a defendant's profits as a measure of damages. Insurance carriers advance this argument under various policies, including commercial general liability (CGL), directors and officers (D&O), employment practices liability (EPL), and errors and omissions (E&O) policies.
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