Insurance companies often defend their insureds against lawsuits. It is important for attorneys and their insured clients to remain vigilant of the insurer's conduct throughout the defense. As we have seen too many times before, depending on how the liability action develops and what the insurer learns during discovery, the insurer might decide to withdraw its defense or ultimately deny indemnity for an adverse verdict. An insurer, however, may be barred from denying coverage if its defense prejudices the insured.

Examining a case

For instance, a Florida appellate court held recently in Hurchalla v. Homeowners Choice Property & Casualty that coverage can indeed be created by estoppel under Florida law, even when the claim is not otherwise covered, when the insurer agrees to defend the claim and the defense prejudices the insured.