Eleventh Circuit Dials Back The Specificity Required In An Insurer’s Reservation of Rights—Will Georgia Courts Agree?

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The U.S. Court of Appeals for the Eleventh Circuit recently held under Georgia law that an insurance company does not waive a coverage defense by defending the policyholder in an underlying case without reserving its rights to later deny coverage based on that specific defense, as long as the insurance company makes clear to the policyholder that it is reserving its rights to deny coverage in general. This unpublished decision, Wellons, Inc. v. Lexington Ins. Co., No. 13-11512, 2014 U.S. App. LEXIS 9091 (11th Cir. May 23, 2014), turns on an interpretation of recent Georgia Supreme Court cases that may or may not be in line with how the Georgia Supreme Court would view its own precedents and creates uncertainty about exactly how specific an insurance company must be when reserving rights in Georgia.

In Wellons, the insured manufacturing company argued that Lexington’s general oral reservation of rights and its references to prior reservations of rights on related matters failed to preserve the grounds upon which Lexington ultimately denied coverage. The Eleventh Circuit disagreed and upheld the coverage denial.

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Topics:  Commercial General Liability Policies, Denial of Benefits, Insurers, Manufacturers, Reservation of Rights

Published In: Civil Procedure Updates, General Business Updates, Insurance Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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