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American Bar Association - Defending Liberty, Pursuing Justice


Vol. 7, No. 4




Duty to Defend

By Laurie E. Dugoniths

The Insurer’s Obligation to Defend Its Insured

The Policy Language

Insurers have two significant obligations to their insureds under a commercial general liability (CGL) policy: a duty to defend, and a duty to indemnify. The duty to defend is a contractual obligation almost always found in CGL policies and, as the costs of litigation continue to rise, is often considered to be more valuable to an insured than the duty to indemnify.

The origin of the duty to defend is purely contractual.1 Most CGL policies contain a standard clause setting forth the obligation and the right to defend.2 The contractual duty to defend comes directly from the insuring agreement set forth in the coverage form and typically provides as follows:

We will pay those sums that the insured becomes legally obligated to pay as damages to which this insurance applies. We will have the right and duty to defend the insured against any “suit” seeking those damages. However, we will have no duty to defend the insured against any “suit” seeking damages for “bodily injury” or “property damage” to which this insurance does not apply. We may, at our discretion, investigate any occurrence and settle any claim or “suit” that may result: But:

(1) The amount we will pay for damages is limited as described in Section III—Limits Of Insurance; and
(2) Our right and duty to defend ends when we have used up the applicable limit of insurance in the payment of judgments or settlements under Coverages A or B or medical expenses under Coverage C.3

Contrast this language with an example of language concerning defense obligations under a professional malpractice policy:

Subject to this Subsection V.C., it shall be the duty of the Insureds and not the duty of the Underwriter to defend Claims against the Insureds.

The Company and the Insured Persons agree not to settle any Claim, incur any Defense Cost or otherwise assume any contractual obligation or admit any liability with respect to any Claim without the Underwriter’s written consent. The Underwriter shall not be liable for any settlement, Defense Cost, assumed obligation or admission to which it has not consented.

The Underwriter shall have the right and shall be given the opportunity to effectively associate with the Company and the Insured Person in the investigation, defense and settlement, including but not limited to the negotiation of a settlement, of any Claim that appears reasonably likely to be covered in whole or in part by this policy.

Defense Costs are part of and not in addition to the Limits of Liability set forth in Item 2 of the Declarations, and the payment by the Underwriter of Defense Costs reduces such Limits of Liability.4

Moreover, compare this provision to language found in this marina operator’s liability policy:

We agree to indemnify to the extent of this coverage’s proportion of legal costs or fees, or expenses of counsel, occasioned by the defense of any claim against you for any liability, or your alleged liability covered by this form, provided that such costs, fees or expenses are incurred with our prior written consent. We shall have the option of naming attorneys to represent you in the defense of any claim insured hereunder made against you and we may exercise exclusive direction and control of said defense. You shall cooperate with us and shall not assume any obligations, admit any liability, or incur any expense for which we may be liable without prior written approval.5

In most jurisdictions, if an insurer fails to provide a defense, it is found to have breached its contractual obligation to the insured and it may be held liable for all damages that normally would be expected to flow from that breach.6

While the insurance carrier’s contractual obligation and right7 to defend the insured usually arises out of this policy language, there is growing support for the proposition that even if the policy does not contain such specific language, the court will require the insurer to defend if the insured has a reasonable expectation of a defense.8 For example, the U.S. Court of Appeals for the 10th Circuit, in deciding whether, under Oklahoma law, a carrier had a duty to defend an alleged advertising injury claim, stated that “the defense duty is measured by the nature and kinds of risks covered by the policy as well as by the reasonable expectations of the insured.”9 It is important to note that if an insured accepts a defense from its insurer, it has an affirmative obligation to cooperate with the insurer in carrying out that defense.10

A “Claim” Versus a “Suit”

Generally speaking, CGL insurance policies distinguish between an occurrence that gives rise to a claim under a policy and a lawsuit being filed against an insured. In fact, the policy language typically requires notice of both. An occurrence generally is defined as “an accident, including continuous or repeated exposure to substantially the same general harmful conditions.”11 The duty to defend generally is triggered when a “suit” asserting liability covered by the policy is filed, but “suit” is generally not a defined term in the policy. While the majority of decisions across the country have held “suit” to mean a complaint or legal action,12 a “suit” for the purposes of triggering the insurer’s obligation does not always mean a complaint filed in a court of law.13 For example, various courts have held that an insured has a right to be reimbursed for its expenses incurred in defending itself in administrative proceedings.14

Tendering the Defense

In order to trigger the insurer’s contractual obligation under the duty to defend, the insured must tender its defense in accordance with the policy’s conditions. The tendering of a defense is considered a precondition to coverage.15 The standard “Commercial General Liability Conditions” provide that the insured is required to give notice of any suit filed against it “as soon as practicable,” furnish the insurer with the specifics concerning when it was served, and forward to the insurer all legal papers it receives on a timely basis.

To ensure that the duty to defend is triggered, an insured is best off tendering its notice of suit to the carrier with an affirmative request for a defense under the policy. However, some courts have held that it is implicit in the notice of suit that the insured is demanding a defense.16 Other courts, though, have held that the obligation was not triggered where the insured did not make a specific request.17 Several other factors, including compliance with the notice requirements specified in the particular policy, also must be weighed in determining whether the carrier’s obligation to defend has been triggered.18 Generally, the insurer has no obligation to reimburse or assume defense costs prior to the time it receives notice of the claim.19


The Duty to Defend in the Presence of a Reservation of Rights

The Insurer’s Reservation of Rights

The tension between an insurer’s right to disclaim coverage where there is none and its obligation to defend the insured from claims that potentially may trigger coverage has led to the concept of “defense under reservation of rights.” A reservation of rights is a statement by the insurer to the insured explaining what the insurer considers to be its rights and obligations under the policy. This statement typically comes in the form of either a reservation of rights letter or a nonwaiver agreement. A reservation of right notice is a unilateral statement by an insurer in writing notifying the insured of its intention to continue with the defense while retaining the right to press all issues that could lead to a finding of noncoverage.106 A proper reservation of rights letter is one that allows the insured to choose intelligently between accepting the insurer’s defense counsel and retaining his own counsel.107 Under either a nonwaiver agreement or a reservation of rights letter, the insurance company can preserve its option to later disclaim coverage during or after defense of the matter.108

A nonwaiver agreement generally serves the same purpose, with the exception that it is a written agreement, signed by the insured and acknowledging that the insurer’s defense of the insured will not be construed as an admission of liability under the policy.109

An insurer does not breach its duty to defend by defending under a reservation of rights or nonwaiver agreement.110 To the contrary, “a reservation of rights allows the insurer to fulfill the broad duty to defend while at the same time investigating and pursuing the narrower issue of whether indemnification will result.”111 “Such an announcement by the insurer permits the insured to decide whether to accept the insurer’s terms for providing a defense, or instead to assume and control its own defense.”112 A prompt reservation of rights protects the insured and negates the inference of a “voluntary relinquishment of a known right to contest coverage.”113 However, the converse is also true: Where an insurer continues to defend with knowledge of facts suggesting it has no coverage, that is generally taken as an acknowledgment of coverage.114 When an insurer, with knowledge of facts indicating noncoverage under the insurance policy, assumes115 or continues the insured’s defense without obtaining a nonwaiver agreement to reserve its coverage defense, the insurer can be held to have waived its policy defense.116

Many jurisdictions require the insurer to obtain the insured’s consent to a reservation of rights before proceeding with a defense.117 In the absence of consent, the insurer is faced with having to file a declaratory judgment action.118 Georgia has a specific procedure to be employed by an insurer when an insured will not consent to its reservation of rights:

Upon learning of facts reasonably putting it on notice that there may be grounds for non-coverage and where the insured refuses to consent to a defense under a reservation of rights, the insurer must thereupon (a) give the insured proper unilateral notice of its reservation of rights, (b) take necessary steps to prevent the main case from going into default or to prevent the insured from being otherwise prejudiced, and (c) seek immediate declaratory relief including a stay of the main case pending final resolution of the declaratory judgment action.119

In Georgia, if the insurer does not follow this procedure its coverage defenses are considered waived.120

The Impact of Waiver and Estoppel

As referenced above, the majority of jurisdictions hold that when an insurer assumes the defense of its insured without first reserving its rights to assert coverage defenses, those defenses may be waived or the insurer may be estopped from raising them in toto.121

Waiver is generally defined as “the intentional relinquishment of a known right, either in terms or by such conduct as clearly indicates an intention to renounce a known privilege or power.”122 “Estoppel is an equitable doctrine intended to prevent a party from taking unconscionable advantage of his own wrong by asserting his strict legal rights.”123

Waiver and estoppel principles are generally stringently applied in this context but “waiver is not available to bring within insurance coverage risks expressly excluded by the terms of the policy.”124 Only a few jurisdictions will apply waiver to rewrite the terms of the policy to include coverage where it was otherwise excluded.125 Generally, waiver or estoppel only will act as a forfeiture of a condition of coverage such as notice or the duty to cooperate.126

Louisiana is one of the few jurisdictions in which courts have held that coverage defenses, including policy exclusions or warranties, can be waived if they are not reserved.127 In Steptore v. Masco Construction Co., the Louisiana Supreme Court refused to permit the insurer to maintain a coverage defense based on the navigational warranty in an ocean marine policy, when the insurer assumed and continued the defense of the insured with knowledge of “unequivocal indications” that the warranty had been breached and did not preserve its right via a reservation of rights.128 The Louisiana Supreme Court stated that

A waiver may apply to any provision of an insurance contract, even though this may have the effect of bringing within coverage risks originally excluded or not covered.129

Another example of waiver operating to expand coverage arises out of the Wilkinson Rule established by the Texas Court of Appeals in 1980.130 In Farmers Texas County Mutual Insurance Co. v. Wilkinson, the insurer defended and tried to settle a personal injury action (arising out of a car accident involving the insured) for more than four years without reserving its coverage position.131 After four years, the insurer filed a declaratory judgment action.132 The insurer then sent the insured two letters, one unconditionally assuming the defense of the insured and another that reserved the company’s right to withdraw its defense subject to the declaratory judgment action.133 The court considered the two letters together and decided that the insurer at best had issued an ambiguous reservation, which it construed as a waiver of the company’s defense of noncoverage.134 Under the Wilkinson Rule, a Texas court will allow the insured to trump the general no-expanded coverage rule only when it can show

(1) that the insurer had sufficient knowledge of the facts or circumstances indicating non-coverage but (2) assumed or continued to defend its insured without obtaining an effective reservation of rights or non-waiver agreement and, as a result, (3) the insured suffered some type of harm.135

To prove harm, the insured must show that it relied to its detriment on the representations of its insurer.136 The Texas Court of Appeals ultimately affirmed the lower court’s finding that the insurer had waived its defenses to noncoverage by its actions.

Though the Wilkinson Rule has been applied as recently as 2007,137 the Texas Supreme Court recently issued an opinion that appears to overrule the lower court’s decision in Wilkinson.138 In Ulico Casualty Co. v. Allied Pilots Ass’n, the Texas Supreme Court stated that it did not agree that an insurer essentially could create a new insurance contract through waiver, which would require the insurer to cover a risk it never intended to cover.139 The court held that

If an insurer defends its insured when no coverage for the risk exists, the insurer’s policy is not expanded to cover the risk simply because the insurer assumes control of the lawsuit defense. But, if the insurer’s actions prejudice the insured, the lack of coverage does not preclude the insured from asserting an estoppel theory to recover for any damages it sustains because of the insurer’s actions.140

Jurisdictions are mixed as to whether an insured must prove prejudice as a result of the insurer’s failure to reserve a particular coverage defense.141 Some jurisdictions conclusively presume prejudice by virtue of the insurer’s defense of the insured; others have taken the position that there is no prejudice requirement because the insurer has taken away the insured’s right to control its own defense, which in itself is prejudice without further proof; the third view is that the insured must prove prejudice.142

The Right to Control the Defense and the Fiduciary Obligations to the Insured

Commensurate with the insurer’s duty to defend is the insurer’s right to control the defense.143 However, the insurer can lose that right when it wrongfully refuses to defend the insured or if the insurer does not accept the insured’s reservation of rights.144 The right to control the defense generally entitles selecting and directing defense counsel, determining defense strategy, and, in many instances, deciding when and whether to compromise a claim through settlement.145

In some jurisdictions, the insured’s duty to defend is held to create a type of fiduciary relationship with the insured.146 The fiduciary relationship discussion often arises in the context of disagreements over the production of claim file materials.147 For example, the Florida Court of Appeals in Liberty Mutual Fire Insurance Co. v. Kaufman considered whether certain claim file materials belonging to the insurer had to be produced to the insured, Kaufman, who was being defended by his insurer, Liberty Mutual.148 Kaufman had initiated eviction proceedings against two of his tenants, and those tenants had filed a counterclaim against him for which Liberty Mutual was providing a defense. After a judgment was entered against Kaufman that included a punitive damages award, Liberty Mutual denied coverage.149 Kaufman thereafter sued Liberty Mutual seeking a declaration of coverage under his policy. Kaufman sought access to Liberty Mutual’s claim file in discovery and Liberty refused to produce it, asserting attorney-client privilege. The court stated that

[a] liability insurer’s relationship with its insured is fiduciary in nature. Thus, a liability insurer has a continuing duty to use the degree of care and diligence a person would exercise in the management of his or her own business when it undertakes to defend its insured. To this end, when an insurer accepts the defense obligations of its insured, certain interests of the insured and the insurer essentially merge. Such common interests bar, among other things, the attorney-client privilege from attaching to communications among the attorney, the insurer, and the insured.150

Based on the above, the court determined that a fiduciary relationship existed between the insured and the insurer because they shared common interests throughout the trial.151 As a result the court ordered the production of certain portions of the claims file.152 The court permitted Liberty Mutual to withhold its internal employee communications as well as the communications with its in-house counsel on a finding that those documents were subject to attorney-client and work-product protections as the relationship between the insured and the insurer had turned adversarial when the insured filed its declaratory judgment action.153

Other courts have held expressly that no such fiduciary relationship exists between the insured and insurer.154 Texas specifically holds that there is no general fiduciary relationship between an insured and insurer such that an insured cannot maintain a breach of fiduciary action against its insurer.155

Conflicts Arising Out of Reservations of Rights and the Right to Independent Counsel

Various jurisdictions have considered whether an insurer’s issuance of a reservation of rights creates a conflict that would require the insurer to relinquish control of the defense to independent counsel.156 The conflict issue arises when an insurer issues a reservation of rights letter asserting there is no coverage as to all or part of a claim.157 A majority of the jurisdictions considering this issue have held that just because the insurer has issued a reservation of rights, the insurer is not necessarily in conflict with its insured such that it has to provide the insured with independent counsel.158

Independent counsel has been defined as counsel that is (1) operating independent of the insurer, (2) not involved in the coverage dispute, and (3) not a part of a captive law firm or in-house for the insurer, such that it relies on the insurer for its primary source of income.159 A conflict of interest should not be presumed just because the insurer selected the defense counsel.160


1. Nat’l Union Fire Ins. Co. v. Guam Hous. & Urban Renewal Auth., 2003 Guam 19 ¶ 16 (Guam 2003) (citing Allstate Ins. Co. v. RJT Enters., 692 So. 2d 142, 144 (Fla. 1997)); Stamford Wallpaper Co. v. TIG Ins., 138 F.3d 75, 79 (2d Cir. 1998).
2. See Nat’l Union, 2003 Guam at ¶ 17; FMC Corp. v. Plaisted & Cos., 72 Cal. Rptr. 2d 467, 508 (Cal. Ct. App. 1998).
3. ISO Form CG 00 01 12 04 (2003).
4. Zurich Non-Profit Directors, Officers and Employees Liability and Reimbursement Policy, Form U-DO-101-B CW (July 1994), at 6–7.
5. N.H. Ins. Co., Yacht Dealers/Marina Operators Coverage Form, JDL 2901 (formerly IMD 510) (4CO) (rev. Mar. 1991, July 1993).
6. See, e.g., Am. Cas. Co. of Reading PA v. Health Care Indem., Inc., 613 F. Supp. 2d. 1310, 1323 (M.D. Fla. 2009; Aladdin’s Carpet Cleaning, Inc. v. Farm Bureau Gen. Ins. Co., 2009 Mich. App. LEXIS 423, at *23–24 (Mich. App. Feb. 26, 2009); United Fire & Cas. Co. v. Boulder Plaza Residential, LLC, 2008 U.S. Dist. LEXIS 39537, at *27 (D.C. Col. May 13, 2008); Roger Kennedy Constr., Inc. v. Amerisure Ins, Co., 506 F. Supp. 2d 1185, 1195 (M.D. Fla. 2007) (citing Carrousel Concessions, Inc. v. Fla. Ins. Guar. Ass’n, 483 So. 2d 513, 516 (Fla. Dist. Ct. App. 1986)).
7. Cont’l Cas. Co. v. City of Jacksonville, 550 F. Supp. 2d 1312, 1342 (M.D. Fla. 2007) (citing Travelers Indem. Co. of Ill. v. Royal Oak Enter., Inc., 344 F. Supp. 2d 1358, 1370 (M.D. Fla. 2004)).
8. See, e.g., Homedics, Inc. v. Valley Forge Ins. Co., 315 F.3d 1135, 1140 (9th Cir. 2003); IDG, Inc. v. Cont’l Cas. Co., 275 F.3d 916, 920 (10th Cir. 2001); Atwater Creamery Co. v. W. Nat’l Mut. Ins. Co., 366 N.W.2d 271, 277–78 (Minn. 1985); Gray v. Zurich Ins. Co., 419 P.2d 168, 171–72 (Cal. 1966).
9. IDG, Inc., 275 F.3d at 920 (quoting First Bank of Turley v. Fid. & Deposit Ins. Co of Md., 928 P.2d 298, 303 (Okla. 1996)).
10. See, e.g., Cont’l Cas. Co., 550 F. Supp. 2d at 1338–42.
11. ISO Form CG 00 01 12 04 (2003).
12. See, e.g., Travelers Prop. Cas. Co. of Am. v. Hillerich & Bradsby Co., Inc., Civ. A. No. 3:05CV-533-H, 2007 U.S. Dist. LEXIS 48785, at *5 (W.D. Ky. Jul. 3, 2007) (“[s]uit” always referred to an action brought in court); Keystone Consol. Indus., Inc. v. Employers Ins. Co. of Wausau, 456 F.3d 758, 763 (7th Cir. 2006); Foster-Gardner, Inc. v. Nat’l Union Fire Ins. Co., 959 P.2d 265, 274 (Cal. 1998); Lapham-Hickey Steel v. Protection Mut. Ins. 655 N.E.2d 842, 843, 846–48 (Ill. 1995) (“suit” in an all-risks policy clearly and unambiguously refers to a proceeding in a court of law; hence there is no duty to defend environmental agency letters and proposed consent decree); Anderson Dev. Co. v. Travelers Indem. Co. 49 F.3d 1128, 1131 (6th Cir. 1995) (Michigan has ruled that a “potentially responsible party” letter is the functional equivalent of a “suit”).
13. See, e.g., Aetna Cas. & Sur. Co. v. Ky. Nat. Res. & Envtl Protection Cabinet, 179 S.W.3d 830, 837 (Ky. 2005).
14. See id. (U.S. Environmental Protection Agency); see also Md. Cas. Co. v. W.R. Grace & Co., 88 Civ. 4337 (JSM), 1994 U.S. Dist. LEXIS 5505, at *3–4 (S.D.N.Y. Apr. 29, 1994) (U.S. Environmental Protection Agency).
15. See Towne Realty, Inc. v. Zurich Ins. Co., 548 N.W.2d 64, 66–68 (Wis. 1996) (citations omitted); Cincinnati Cos. v. W. Am. Ins. Co., 701 N.E.2d 499, 502 (Ill. 1998).
16. See, e.g., Brown v. Church Ins. Co., 2005 Del. Super. LEXIS 400, at *27 (Del. Super. Ct. Mar. 24, 2005) (adopting New Hampshire rule that notice is the trigger of duty to defend); Cincinnati Cos., 701 N.E.2d at 503.
17. See, e.g., Unigard Ins. Co. v. Leven, 983 P.2d 1155, 1160 (Wash. Ct. App. 1999); First Bank of Turley v. Fid. & Deposit Ins. Co of Md., 928 P.2d 298, 304 (Okla. 1996); Am. Gen. Fire & Cas. Co. v. Progressive Cas. Co., 799 P.2d 1113, 1119 (N.M. 1990).
18. See, e.g., Blaske v. Provident Life & Acc. Ins. Co., 162 Fed. Appx. 943, 946 (11th Cir. 2006) (unpublished) (applying Georgia law) (timely notice is condition precedent to duty to defend); Prof’l Prod. Research, Inc. v. Gen. Star Indem. Co., 06 Civ. 5685 (CM) (GWG), 2008 U.S. Dist. LEXIS 50904, at *14 (S.D.N.Y June 30, 2008) (notice of loss is condition precedent to coverage).
19. See, e.g., Ingalls Shipbuilding v. Fed. Ins. Co., 410 F.3d 214, 227 (5th Cir. 2005); Elan Pharm. Research Corp. v. Employers Ins. of Wausau, 144 F.3d 1372, 1381–82 (11th Cir. 1998); Hoppy’s Oil Serv., Inc. v. Ins. Co. of N. Am., 783 F. Supp. 1505, 1509 (D. Mass. 1992); but see Liberty Mut. Ins. Co. v. Black & Decker Corp., 383 F. Supp. 2d 200, 207 n.5 (D. Mass. 2004).


106. Twin City Fire Ins. Co. v. Ben Arnold-Sunbelt Beverage Co. of S.C., LP, 336 F. Supp. 2d 610, 613 (D.S.C. 2004) (citing Black’s Law Dictionary 1082 (7th ed. 1999)).
107. Safeco Ins. Co. of Am. v. Liss, 2005 Mont. Dist. LEXIS 1073, at *25 (Mont. Dist. Ct. 2005) (citing Royal Ins. Co. v. Process Design Assoc., Inc., 582 N.E.2d 1234, 1239 (Ill. App. Ct. 1991)).
108. Sauer v. Home Indem. Co., 841 P.2d 176, 183 (Alaska 1992).
109. Draft Systems, Inc. v. Alspach, 756 F.2d 293, 296 (3d Cir. 1985).
110. Roger Kennedy Constr., Inc. v. Amerisure Ins, Co., 506 F. Supp. 2d 1185, 1193–94 (M.D. Fla. 2007) (M.D. Fla. 2007); RLI Ins. Co. v. Grand Pointe, LLC, No. 1:05-CV-157, 2007 U.S. Dist. LEXIS 53058, at *37 (E.D. Tenn. Jun. 12, 2007); Scottsdale Ins. Co. v. Sullivan Props., Inc., 2007 U.S. Dist. LEXIS 57021, at *10–11 (D. Haw. Aug 2, 2007); Davis v. State Farm Fire & Cas. Co., NO. 1:03-cv-01208-SEB-VSS, 2005 U.S. Dist. LEXIS 4281, at *12–13 (S.D. Ind. 2005).
111. Davis, 2005 U.S. Dist. LEXIS 4281, at *18.
112. Scottsdale Ins. Co., 2007 U.S. Dist. LEXIS 57021, at *10.
113. Arceneaux v. Amstar Corp., 969 So. 2d 755, 768 (La. Ct. App. 2007) (citing ROBERT KEETON, INSURANCE LAW § 6.6 (1971)).
114. Id.
115. Vara v. Essex Ins. Co., 604 S.E.2d 260, 262 (Ga. Ct. App. 2004) (“[A]n insurer who assumes and conducts an initial defense without written notification to the insured that such defense is tendered under a reservation of rights by the insurer, is deemed estopped to assert the defense of noncoverage and is deemed to have waived its right to deny liability under the policy.”); Joslyn Mfg. Co. v. Liberty Mut. Ins. Co., 939 F. Supp. 603, 610 (N.D. Ill. 1996) (“Under Louisiana law, the duty of an insurer to reserve its rights can arise once the insurer is notified of an occurrence even if the insurer does not yet know of a suit.”)
116. Arceneaux, 969 So. 2d at 765 (citing Steptore v. Masco Constr. Co., 643 So. 2d 1213, 1216 (La. 1994)).
117. Citi Apartments, Inc. v. Markel Ins. Co., No. C 06-5752 CW, 2007 U.S. Dist. LEXIS 44469, at *11 (N.D. Cal. June 11, 2007) (finding that insured must expressly waive conflict created by reservation of rights); Twin City Fire Ins. Co. v. City of Madison, 309 F.3d 901, 905 (5th Cir. 2002) (applying Mississippi law); Richmond v. Ga. Farm Bureau Mut. Ins. Co., 231 S.E.2d 245, 248 (Ga. Ct. App. 1976); CHI of Alaska, Inc. v. Employers Reinsurance Corp., 844 P.2d 1113, 1118 (Alaska 1993) (stating insured must surrender its right to control the defense if the insured does not accept the reservation of rights).
118. Richmond, 231 S.E.2d at 248; see also Servants of the Paraclete, Inc. v. Great Am. Ins. Co., 857 F. Supp. 822, 831 (D.N.M. 1994) (stating that where the coverage is in doubt, the proper remedy is for the insurer to seek a court ruling as to noncoverage).
119. Briggs & Stratton Corp. v. Concrete Sales & Ser., Inc., 166 F.R.D. 43, 46 (M.D. Ga. 1996) (citing Richmond, 231 S.E.2d 245).
120. Richmond, 231 S.E.2d at 248.
121. See, e.g., Canal Ins. Co. v. Flores, 524 F. Supp. 2d 828, 834 (W.D. Tex. 2007); Devcon Int’l Corp. v. Reliance Ins. Co., Civil No. 2001-201, 2007 U.S. Dist. LEXIS 78672, at *14–15 (D.V.I. Oct. 23, 2007).
122. Day-Towne v. Progressive Halcyon Ins. Co., 164 P.3d 1205, 1211 (Or. Ct. App. 2007); see also Tate v. Charles Aguillard Ins. & Real Estate, Inc., 508 So. 2d 1371, 1373 (La. 1987).
123. Minn. Commercial Ry. Co. v. Gen. Star Indem. Co., 408 F.3d 1061, 1063 (8th Cir. 2005).
124. Emerson v. Med. Mut. of Ohio, No. C-030074, 2004 Ohio App. LEXIS 3512, at *15 (Ohio Ct. App. July 23, 2004); see also Milwaukee Metro. Sewage Dist. v. Sedgwick of Ill., Inc., No. 05-C-1352, 2008 U.S. Dist. LEXIS 27667, at *38 (E.D. Wis. Apr. 4, 2008) (insured sought to use estoppel to compel insurer to apply coverage to property not listed on policy); Sayah v. Metro. Prop. & Cas. Ins. Co., 733 N.W.2d 192, 197 (Neb. 2007) (holding waiver could not be used to expand liability cover in to property damage cover); Day-Towne, 164 P.3d at 1211; Minn. Commercial Ry., 408 F.3d at 1063 (applying Minnesota law); Pekin Ins. Co. v. Tysa, Inc., CA No. 7:05-3233-HMH, 2006 U.S. Dist. LEXIS 93525, at *32 (S.D. Iowa Dec. 27, 2006).
125. Steptore v. Masco Constr. Co., 643 So. 2d 1213 (La. 1994); see also Minn. Commercial Ry., 408 F.3d at 1063 (citing Tozer v. Ocean Acc. & Guar. Corp., 103 N.W. 509, 511 (Minn. 1905) (concerning application of the “assumption-of-defense” estoppel)); Tate, 508 So. 2d at 1374; Ivey v. United Nat. Indem. Co., 259 F.2d 205, 207 (9th Cir. 1958); McGee v. Guardian Life Ins. Co., 472 So. 2d 993, 995 (Ala. 1985); but see Tate at 1374 (citing Comment, Waiver and Estoppel in Louisiana Insurance Law, 22 La. L. Rev. 202, 202–03 (1961) (“Only powers or privileges relating to conditions of a contract can be waived; thus waiver cannot be used to extend insurance coverage to a risk not properly within the limits of a policy as written.”)).
126. Day-Towne, 164 P.3d at 1210–11.
127. Steptore, 643 So. 2d 1213.
128. 1217.
129. 1216; see also Arceneaux v. Amstar Corp., 969 So. 2d 755, 765 (La. Ct. App. 2007); T.H.E. Ins. Co. v. Larsen Intermodal Servs., Inc., 242 F.3d 667, 675 (5th Cir. 2001).
130. Farmers Tex. County Mut. Ins. Co. v. Wilkinson, 601 S.W.2d 520, 521(Tex. App. 1980).
131. 521.
132. Id.
133. Id.; see also Canal Ins. Co. v. Flores, 524 F. Supp. 2d 828, 835 (W.D. Tex. 2007).
134. Wilkinson, 601 S.W.2d at 523.
135. Canal Ins. Co., 524 F. Supp. 2d at 834.
136. 836.
137. 834.
138. Ulico Cas. Co. v. Allied Pilots Ass’n., 262 S.W.3d 773, 782–83 (Tex. 2008).
139. 775.
140. 787.
141. Couch on Insurance, supra note 21, §§ 202:67–69.
142. Id.; see also Arceneaux v. Amstar Corp., 969 So. 2d 755, 767 (La. Ct. App. 2007).
143. Assurance Co. of Am. v. Lucas Waterproofing Co., Inc., 581 F. Supp. 2d 1201, 1213 (S.D. Fla. 2008); Monarch Plumbing Co., Inc. v. Ranger Ins. Co., No. S-06-1357 WBS KJM, 2006 U.S. Dist. LEXIS 68850, at *11 (E.D. Cal. Sept. 23, 2006); see also Cont’l Cas. Co. v. Jacksonville, 283 Fed. Appx. 686, 689–90 (11th Cir. 2008) (applying Florida law); Nutmeg Ins. Co. v. Employers Ins. Co. of Wausau, No. 3:04-cv- 1762-BF (R), 2006 U.S. Dist. LEXIS 7246, at *47 (N.D. Tex. Feb. 24, 2006); HK Sys., Inc. v. Admiral Ins. Co., No. 03-C-0795, 2005 U.S. Dist. LEXIS 39939, at *12 (E.D. Wis. June 24, 2005); Hartford Cas. Ins. Co. v. A&M Assocs., Ltd., 200 F. Supp. 2d 84, 89 (D.R.I. 2002) (applying Massachusetts law).
144. See, e.g., Int’l Cas. Co., 283 Fed. Appx. at 689 (applying Florida law); Nutmeg Ins. Co., 2006 U.S. Dist. LEXIS 7246, at *47; HK Sys., Inc., 2005 U.S. Dist. LEXIS 39939, at *12; CHI of Alaska, Inc. v. Employers Reinsurance Corp., 844 P.2d 1113, 1118 (Alaska 1993); A&M Assocs., 200 F. Supp. 2d at 89.
145. James A. Fischer, Insurer or Policyholder Control of the Defense and the Duty to Fund Settlements, 2 Nev. L.J. 1 (2002).
146. Id.(citing Birth Ctr. v. St. Paul Cos., Inc., 727 A.2d 1144, 1157–58 (Pa. Super. Ct. 1999) (fiduciary relationship arising out of the insurance contract is based upon the trust and reliance that the insured is required to place in the insurer as a result of the unequal bargain and the insurer’s retention of discretionary control over the decision to settle or litigate the claim)); Brodeur v. Am. Home Assurance Co., 169 P.3d 139, 154 n.15 (Colo. 2007); Hutchinson v. Farm Family Cas. Ins. Co., 867 A.2d 1, 22 (Conn. 2005); Liberty Mut. Fire Ins. Co. v. Kaufman, 885 So. 2d 905, 908 (Fla. Dist. Ct. App. 2004).
147. Kaufman, 885 So. 2d at 908.
148. Id.
149. 907.
150. 908 (internal citations omitted).
151. 909.
152. Id.
153. 909–10.
154. See, e.g., Employers Reinsurance Corp. v. Mass. Mut. Life Ins. Co., No. 06-0188-CV-W-FJG, 2007 U.S. Dist. LEXIS 24161, at *11 (W.D. Mo. Apr. 2, 2007) (applying Connecticut law and finding that Connecticut courts have held that unless a third party is involved, the insurer/insured relationship is one of contract and is not a fiduciary one); Evanston Ins. Co. v. Robb Techs, LLC, No. 2:05-cv-1138-KJD-RJJ, 2006 U.S. Dist. LEXIS 46698, at *8 (D. Nev. July 10, 2006) (finding that while contract is fiduciary in nature, no fiduciary relationship is created); Meritage Corp. v. Clarendon Nat’l Ins Co., No. 3:03-cv-1439-G, 2004 U.S. Dist. LEXIS 29723, at *27 (N.D. Tex. Oct. 6, 2004) (stating that Texas law is “clear that there is no general fiduciary duty between an insurer and its insured”); Vu v. Prudential Prop. & Cas. Ins. Co., 33 P.3d 487, 492 (Cal. 2001) (“The insurer-insured relationship, however, is not a true ‘fiduciary relationship’ in the same sense as the relationship between trustee and beneficiary. . . .”).
155. Meritage Corp., 2004 U.S. Dist. LEXIS 29723, at *27.
156. See, e.g., Long v. Century Indem. Co., 163 Cal App. 4th 1460, 1470 (2d Dist. 2008); N. County Mut. Ins. Co. v. Davalos, 140 S.W. 3d 685 (Tex. Sup. Ct. 2004); San Diego Navy Fed. Credit Union v. Cumis Ins. Society, 162 Cal. App. 3d 358 (4th Dist. 1984).
157. Twin City Fire Ins. Co. v. City of Madison, 309 F.3d 901, 904 (5th Cir. 2002) (applying Mississippi law).
158. Monarch Plumbing Co., Inc. v. Ranger Ins. Co., No. S-06-1357 WBS KJM, 2006 U.S. Dist. LEXIS 68850, at *11–12 (E.D. Cal. Sept. 23, 2006); Twin City Fire Ins. Co. v. Ben Arnold-Sunbelt Beverage Co. of S.C., LP, 336 F. Supp. 2d 610, 612–13 (D.S.C. 2004); Trinity Universal Ins. Co. v. Stevens Forestry Serv., Inc., 335 F.3d 353, 356 (5th Cir. 2003) (applying Louisiana law); James 3 Corp. v. Truck Ins. Exch., 111 Cal. Rptr. 2d 181, 186 (Cal. Ct. App. 2001); Nat’l Union Fire Ins. Co. v. Circle, Inc., 915 F.2d 986, 991 (5th Cir. 1990).
159. Hartford Cas. Ins. Co. v. A&M Assocs., Ltd., 200 F. Supp. 2d 84, 89–90 (D.R.I. 2002).
160. Cent. Mich. Bd. of Trs. v. Employers Reinsurance Corp., 117 F. Supp. 2d 627, 635 (E.D. Mich. 2000).

The Reference Handbook on the Comprehensive General Liability Policy

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Laurie E. Dugoniths is a member of the Johnson Firm, LLC, in Atlanta, Georgia, where she regularly represents the interests of insurance carriers in disputes with insureds and third parties concerning a variety of different coverage issues involving commercial property, commercial general liability, and maritime liability policies. Ms. Dugoniths also regularly provides coverage analysis and counseling on bad faith and extracontractual liability.

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