16 Mar 2018 It’s Not Over Until It’s Over: An Insurer’s Continuing Duty To Defend After The Dismissal Of Covered Claims
Claims, Insurance, Insurance Coverage | Matthew O'HanlonImagine this scenario: you are a California policyholder and have been sued in a lawsuit alleging one covered claim and multiple non-covered claims. Your insurer, applying California insurance law, thereafter recognizes both (1) its duty to defend subject to a reservation of rights and (2) your right to independent counsel based on the nature of the reservation of rights. In the middle of the lawsuit, your defense attorney files a motion for summary adjudication that, when granted, leads to the dismissal of the one covered claim. Your insurer then threatens to stop funding the defense of the case, claiming that the dismissal of the covered claim has terminated its duty to defend. Is your insurer right under California law? Not in our view. Both…