Qualcomm Denied $9M In Excess Insurance Coverage

SAN DIEGO (CN) - A California appeals court let Qualcomm's insurer off the hook for $9 million in legal defense costs under an excess liability policy because Qualcomm had not paid the full $20 million primary policy limit.

Qualcomm had taken out two insurance policies - a primary policy and an excess policy - both with $20 million liability limits. In May 1999 Qualcomm employees and ex-employees began filing lawsuits, including a class action, over their alleged right to unvested company stock options.

Five years later, Qualcomm agreed to release its primary insurer, National Union Fire Insurance Company of Pittsburgh, from future liability if it reimbursed the company for $16 million in settlement payments and defense costs.

Qualcomm then sued Certain Underwriters at Lloyd's for more than $9 million in additional costs under the excess policy.

Certain Underwriters argued that Qualcomm could only dip into the excess policy after it had exhausted the underlying policy limit of $20 million.

The appeals court agreed that the $16 million settlement with National Union was not enough to trigger the excess policy, and affirmed dismissal of Qualcomm's suit.

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