In honor of the new Star Wars film let’s take a look at an epic type of battle in the insurance industry. An insurance carrier has two duties in the policy that are regularly enforced by courts. One is the duty to defend. The other is the duty to indemnify. Both assist the policy holder, but they are not created equal. Duty to Defend. When a policyholder is sued or a claim [...]
1. A drop down clause provides coverage that "drops down" and acts as primary coverage in certain situations. These include when the primary insurer is insolvent or the underlying policy aggregate limits have been exhausted. 2. A drop down clause covering insolvency will only be effective if the policy says so. For example, if the excess or umbrella policy does not provide drop down coverage if the primary insurer is insolvent, then the clause is not triggered. [...]
1. Excess insurance policies do not cover defense costs. For this reason, the cost for excess coverage is cheaper than primary coverage. I should say usually excess policies do not cover defense costs. Nothing is absolute. However courts across all jurisdictions have consistently upheld an insurance company's denial of defense costs under the express terms of the policy contract. See, e.g. Cornhusker Agr. Ass'n, Inc. v. Equitable Gen. Ins. Co., 223 Neb. 618, 627, 392 [...]
Sometimes a policyholder can insist upon his own choice of defense counsel. And submit the bill to the carrier to pay. I highly recommend this practice, especially in cases where a sophisticated defense is needed such as railroad, products liability, and airplane lawsuits. Here are four situations when choice of counsel is warranted: 1. The insurer has waived its right to select counsel. Courts are almost universal in finding a conflict of interest arises [...]
