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The Changing Face of Right to Reimbursement for Defenses Provided Under Reservation of Rights

Insurers beware: A survey shows the majority of U.S. courts now refuse to allow insurers to recoup settlement or defense fees for defenses provided under reservation of rights.

By Stacy Monahan Tucker | Updated on March 05, 2014

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?

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