breach of duty

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In addition to insurance companies’ broad duty to defend all claims arising from complaints seeking damages potentially covered by their policies, Pennsylvania law provides an opportunity for policyholders to have their insurance companies pay for litigation costs associated with claims and/or suits that overlap or are intertwined with a suit the insurance company is already defending.  

The magic words are “inextricably intertwined”

Policyholders may seek defense costs for related litigation if those claims are made as: (1) counterclaims in suits the insurance company is already defending, or (2) separate, independent lawsuits with facts or defense work that overlap with a suit the insurance company is defending. The insurance company’s duty to defend such related claims is not automatic, however. Pennsylvania courts make it clear that in both instances, the cases or claims must be “inextricably intertwined” in order to trigger the insurance company’s obligation to pay litigation costs.Continue Reading Insurers must foot the bill for “inextricably intertwined” counterclaims in Pennsylvania 

The tables may be turning. Insurers often seek to avoid their coverage obligations by invoking time limitations in their policies for providing claim notifications. On the other hand, these same insurers routinely take their sweet time in responding to claims, contending that they need time to “investigate” even before making a decision whether or not to provide a defense to a lawsuit, which in most cases simply requires the insurer to review the allegations in the complaint to determine whether there is a potential for coverage under their policies. Once they decide to provide a defense (which in some cases can be weeks if not months after the insured has had to retain its own defense counsel to respond to a suit), insurers claim they have the right to control the insured’s defense, including the selection of defense counsel, and will force the insured to accept new defense counsel that are not up to speed on the case. Not so fast, according to a recent decision from the United States District Court for the Northern District of California.
Continue Reading Insurers Beware: Respond Promptly or Lose the Right to Control the Defense