Reservation of Rights

News & Analysis as of

Pennsylvania Supreme Court Holds Insured Entitled to Settle Underlying Claim Even Absent Insurer Consent

In its recent decision in Babcock & Wilcox Co. v. American Nuclear Insurers, 2015 Pa. LEXIS 1551 (Pa. July 21, 2015), the Supreme Court of Pennsylvania, deciding a matter of first impression within the Commonwealth, had...more

Duty to Cooperate Ruling Narrows Insurers’ Ability to Foreclose Coverage for Settled Class Action Claims

Insurance policies typically include a cooperation clause, which requires the insured to cooperate with the insurer in the defense of a covered claim. Insurers routinely use this clause as a sword against their insureds by...more

The Pennsylvania Supreme Court Issues Its Landmark Ruling in Babcock

On July 21, 2015, the Pennsylvania Supreme Court issued its much-anticipated decision in Babcock & Wilcox Company, et al. v. American Nuclear Insurers, et al., No. 2 WAP 2014 (Pa. July 21, 2015). The court resolved an issue...more

PA Supreme Court Gives Policy Holders Right to Settle Without Insurer Approval

Insurance coverage counsel have been anxiously awaiting the Pennsylvania Supreme Court's decision in Babcock & Wilcox Co. v. Am. Nuclear Insurers, 2015 Pa. Lexis 1551 (July 21, 2015), since the high court agreed to hear the...more

The Pennsylvania Supreme Court Issues Its Landmark Decision in Babcock

On July 21, 2015, the Pennsylvania Supreme Court issued its much-anticipated decision in Babcock & Wilcox Company et. al. v. American Nuclear Insurers et. al, No. 2 WAP 2014. Reed Smith filed an amicus brief in the case...more

Can an Insurer Intervene in a Class Action to Protect Against a Collusive Settlement?

Liability insurers are sometimes faced with a difficult scenario: Their insured has been sued in a class action with potentially large stakes. The insurer believes they have no duty to defend and a denial of coverage is...more

What does "will be insured" actually mean?

Balancing obligations to provide health and life insurance benefits to retirees with other legitimate business needs can be tricky. Although retirees depend on the benefits, employers may need to modify benefit plans for...more

A Primer on Insurance Underwriting in China

China is one of the largest and fastest-growing insurance markets in the world. It provides the global insurance and reinsurance industry with tremendous opportunities but also presents challenges with its unique legal and...more

Insurer Seeks Declaratory Judgment Against Policyholder for Data Breach

Late last month, Columbia Casualty Company instituted a declaratory judgment lawsuit in the United States District Court for the Central District of California against its insured, Cottage Health System. Columbia Casualty...more

Submitting Your Defense Bills to Insurers Could Mean Waiving Privilege

Recently, the California Court of Appeal decided County of Los Angeles Board of Supervisors v. Superior Court, 235 Cal. App. 4th 1154 (2015), a case considering whether the Los Angeles County Sheriff's Department could be...more

Conclusory Allegations Held Insufficient to Support Declaratory Relief on Right to Independent Counsel or Allocation of Defense...

In Centex Homes v. St. Paul Fire & Marine Ins. Co. (No. E060057, filed 5/22/15), a California Court of Appeal held that a developer’s declaratory relief lawsuit seeking a declaration of the right to independent counsel was...more

Insurer Declaratory Action: To Stay or Not to Stay?

This month’s edition of For the Defense magazine focuses on insurance law. That makes sense. It is difficult to do much defending without bumping against insurance issues. Our torts professor constantly emphasized the...more

Is That Covered? Reservation of Rights

If a policyholder is sued, she can tender the defense of that suit to her insurance company. If the insurance company believes that there may not be coverage, but cannot make a clear determination based upon the complaint...more

Insurers’ Right To Recover Fees Directly From Independent Counsel To Be Decided

Under California Civil Code 2860, an insured who is entitled to a defense from a liability insurer may also be entitled to select counsel of its choice, even though the insurance policy states that the insurer has the right...more

Reservation of Rights and the Insurer [Video]

From the recent PLUS webinar “Reservation of Rights and the Insurer,” Atea Martin (CNA Insurance Company) and Moiré Moron (QBE North America) discuss some of the issues once independent counsel is utilized....more

Sorry, But Your Reservation Has Been Cancelled: How an Insurance Company’s Failure To Give Proper Notice of Its Reservation of...

Most courts hold that an insurance company will not be estopped from denying coverage, even if the insurance company participates in the defense, provided it gives timely notice to the policyholder through a reservation of...more

Real Property, Financial Services & Title Insurance Update: Week Ending April 3, 2015

REAL PROPERTY UPDATE - Judgment: amount awarded in judgment of foreclosure must be supported by competent evidence and lender not entitled to award of interest or fees when only statement in evidence reflected...more

A mere reservation or rights by an insurer does not require the insurer to supply independent counsel to its insured

A bill recently introduced in the Illinois State Senate known as the Insureds Independent Counsel Act, while, if enacted, will only apply in that State, is instructive as to when an insurance company must supply independent...more

Insurance Recovery Law - March 2015

New York Federal Court Rejects Insurer’s Request for Recoupment - Why it matters: The federal court, applying New York law, held that an energy drink manufacturer’s advertising coverage claim—arising from underlying...more

A Delayed Defense is a Waiver of Civil Code Section 2860

When presented with a lawsuit potentially seeking covered damages, a liability insurer owes a duty to defend and is faced with three options:1) tender the defense unconditionally and therefore control the defense, including...more

Court Confirms Insurer Permitted to Choose Counsel in Discharging Duty to Defend

An insurer’s duty to defend and how that duty gets discharged may be one of the most frequently litigated coverage issues. Although typical policies afford insurers the right to control their insureds’ defense, insureds...more

Insurance Recovery Law -- January 2015

Insured v. Insured Exclusion Ambiguous When Applied to FDIC, 11th Circuit Rules - Why it matters: In the continuing split among courts considering insured v. insured exclusions, the Eleventh U.S. Circuit Court...more

“Equal Consideration" Does Not Require Overpayment

In Arizona, options are available to insureds when an insurer does not unconditionally agree to defend without issuing a reservation of rights letter, or denies coverage altogether. These circumstances give rise to Morris and...more

Recent Decisions Reinforce the Value of Quality over Quantity in a Reservation of Rights Letter

In two recent cases, Advantage Builders & Exteriors v. Mid-Continent Casualty Co. No. WD 76880 (Mo. Ct. App. Sept. 2, 2014) and EAN Services, LLC v. Brunson, No. 2-14-118 (Ill. Ct. App. September 8, 2014), the courts remind...more

IBM Corp. v. United States—A Study in the Risks and Rewards of Including a Reservation of Rights in an Offer

Including a reservation of rights in a proposal is a delicate matter. On the one hand, it is in the contractor’s best interest to identify clearly the assumptions on which its proposal is based....more

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