HNRK Coverage Corner
On November 14, 2023, the Supreme Court of Hawaii issued a decision in St. Paul Fire & Marine Ins. Co. v. Bodell Construction Co., Case No. SCCQ-22-0000658, holding that insurers may not recoup defense costs for non-covered claims absent an express policy provision for reimbursement.
Answering a certified question from the United States District Court for the District of Hawaii, the Court explained:
The duty to defend is broader than the duty to indemnify. An insurer only indemnifies covered claims. But an insurer must defend when there is possible coverage, even “groundless ...
On July 13, 2023, the Eleventh Circuit issued a decision in Continental Casualty Co. v. Winder Laboratories, LLC, Case No. 21-11758, resolving an issue of first impression under Georgia law—whether an insurer can recoup defense costs it paid under a duty to defend policy upon a finding that the insurer has no duty to indemnify the insured. The Court ruled that such recoupment is not permitted unless the policy expressly provides for it, explaining:
As an initial matter, we disagree with the insurers’ argument that there is a clear “majority” rule favoring recoupment across ...
On March 31, 2023, Justice Cohen of the New York County Supreme Court, Commercial Division issued a decision in Liberty Ins. Underwriters Inc. v. Plaza Condominium, 2023 NY Slip Op 31035(U), granting an insurer’s motion to recoup defense expenses from the insured, after the Court found that there was no duty to indemnify. The Court explained:
Liberty established in its original summary judgment papers that it defended the Underlying Action subject to a reservation of rights, which included (implicitly at first, then explicitly) a right to recoup expenses if it were later ...
On January 9, 2023, Justice Lebovits of the New York County Supreme Court issued a decision in Peleus Ins. Co. v RCD Restorations Inc., 2023 NY Slip Op 50034(U), holding that an insurer could not recoup defense costs from its insured, without an express reservation of the right of recoupment. The Court explained:
Although Peleus provided RCD with coverage in the underlying action/third-party action under a reservation of rights (see NYSCEF No. 17 [reservation of rights letter]), the letter notifying RCD of Peleus’s coverage position did not reserve the right "to recoup expenses ...
On December 30, 2020, the Second Department issued a decision in American W. Home Ins. Co. v. Gjonaj Realty & Mgt. Co., 2020 NY Slip Op 08027, ruling that an insurer was not entitled to recoup defense costs it paid, despite the court’s determination that the insurer had no duty to indemnify.
Under New York law, a liability insurer’s duty to defend is “exceedingly broad” and is triggered whenever there is a “reasonable possibility” of coverage. Thus, "an insurer may be contractually bound to defend even though it may not ultimately be bound to pay, either because its insured is ...
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Recent Posts
- Hawaii Supreme Court Holds That Insurers May Not Recoup Defense Costs for Uncovered Claims Absent Express Policy Provision for Reimbursement
- Is Carbon a “Pollutant”? — The Supreme Courts of Alaska and Hawaii Receive Certified Questions Regarding Scope of Pollution Exclusions in Liability Policies
- Court Rules That D&O Policy’s “Bump-Up” Exclusion Does Not Apply to Merger Transaction
- Eleventh Circuit Rules Insurer Cannot Recoup Defense Costs Under Duty to Defend Policy
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- New Jersey Appellate Court Holds That Policy’s War Exclusion Did Not Apply to State-Sponsored Cyberattack
- New York Court Discusses Appellate Division Split Over Recoupment of Defense Costs Under a Duty to Defend Policy
- Delaware Law Governs D&O Policy Issued to Delaware Corporation Doing Business Outside the State
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