Another Reason to Hire Counsel: No Duty to Reimburse Insureds for Self-Representation


California Court of Appeal, Fourth District

In Richards v. Sequoia Ins. Co., 195 Cal.App.4th 431 (April 28, 2011), the California Court of Appeal for the Fourth District held that a policy affording coverage for “expenses incurred” was not obligated to compensate the insureds for their self-representation in the underlying action. Lodge owners Linda and Thomas Richards were sued by the estate of a former patron who had been fatally injured in a single car accident after leaving the lodge’s bar. Upon receipt of the tender, Sequoia Insurance Company advised that the matter had been referred to coverage counsel and that the Richards should retain counsel at their expense to defend the lawsuit pending a coverage determination. Sequoia also agreed to reimburse the insureds for reasonable defense costs from the date of tender, if an obligation was owed. The Richards, who were both licensed attorneys, then retained counsel but performed the majority of the legal work. Shortly thereafter, Sequoia accepted the Richards’ defense, subject to a reservation of rights. Ultimately, Sequoia settled the lawsuit and paid all attorneys’ fees owed to the Richards’ counsel.

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