California Court Holds Umbrella Carrier May Have Defense Obligations Before Primary Coverage Is Exhausted

A recent decision from a California federal court highlights that umbrella insurers may have defense obligations even before primary coverage is exhausted. In Westchester Fire Insurance Co. v. The Roman Catholic Bishop of Orange, No. 8:24-cv-01539-MRA-ADS, slip op. at 1 (C.D. Cal. June 1, 2026), the court held that Westchester owed the Roman Catholic Bishop of Orange a duty to defend hundreds of clergy-abuse lawsuits under commercial umbrella policies, even though the primary insurer also may have had a defense obligation for the claims.

RCBO was named in more than 200 actions brought under California’s Child Victims Act, with underlying plaintiffs alleging sexual abuse by priests and clergy over many years. RCBO had primary general liability policies issued by Centennial, but those policies included a $500,000 per-occurrence limit for bodily injury, while Westchester issued umbrella policies that included a Defense Settlement provision requiring Westchester to defend certain occurrences not covered by the underlying policies.

The issue was whether the phrase “occurrence not covered” referred only to claims outside the primary policies’ indemnity coverage, as RCBO argued, or also required the claims to be outside the primary policies’ defense coverage, as Westchester argued.

The court agreed with RCBO, holding that “occurrence not covered” referred to indemnity coverage under the underlying policies, not the primary insurer’s defense obligation. The court rejected Westchester’s attempt to import California’s broad duty-to-defend principles into the umbrella policies’ trigger language, explaining that Westchester’s interpretation conflates the concept of the duty to defend with the scope of underlying insurance” and noting that the scope of the primary insurance policies “is narrower than the universe of claims for which Centennial would owe a duty to defend.” The court stated that its ruling was further reinforced by the “fundamental principle of insurance law—that ‘any uncertainty or ambiguity in an insurance contract is to be construed most strongly against the insurer.’” The court also found RCBO had demonstrated that the CCVA actions involved occurrences potentially covered by the umbrella policies but not covered by Centennial’s indemnity obligations, including allegations of intentional conduct, humiliation, shock, mental anguish and invasion of privacy.

Based on this decision, policyholders should not assume umbrella coverage begins only after primary limits are exhausted. Instead, depending on the policy language, an umbrella carrier may have defense obligations much earlier, creating additional funding for high-exposure litigation.