You're a claims manager for an insurance company. An insured is being sued and has tendered its defense under its liability insurance policy with you. The issues in the complaint brought against your insured are complicated. Based on the facts of the complaint, it is not immediately clear whether the allegations are covered by the policy.

In fact, there's a good chance it won't be clear, even after considerable factual investigation occurs. As a claims manager, how do you meet your duties to the insured under the policy in this situation while protecting the right of the insurer? Or, perhaps you are the attorney enlisted by the insurance company to offer a coverage opinion and recommendations for next steps. How would you advise the insurer then?

Insurers generally find comfort in the knowledge that, even if they were confronted by a difficult and expensive liability case where coverage was not clear, they could offer their insured a defense under reservation of rights while the insurer continued to investigate the case. In the event that no coverage existed for the claim, the insurer could recoup defense or settlement fees.