Perspective
Aug. 2, 2013
Steep penalties for insurers that wrongfully refuse to defend
This principle incentivizes the insurer to meet its duty to defend by vigorously searching the underlying complaint for facts which create the potential for coverage. By Peter S. Selvin
When an insurer wrongfully refuses to defend an insured under a liability policy the consequences to the insurer are harsh. Thus, under California law, when an insurer that has been found to have wrongfully breached its duty to defend, it will be barred thereafter from relying on exclusions to coverage which would have otherwise excused or negated its duty to indemnify its insured. See, e.g., Amato v. Mercury Casualty Co., 53 Cal. App. 4...
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