Consequences of an Insurer's Breach of the Duty to Defend: Columbia Casualty Co. v. HIAR Holdings, LLC in the Context of the ALI Restatement of the Law of Liability Insurance
An insurer's duty to defend in connection with liability insurance policies is well-established and reasonably well understood. The consequences for the breach of that duty, however, are much less clear. On one hand, one might argue that this duty is a contractual duty giving rise to contractual remedies. The insured provides its own defense and, if the insurer wrongfully failed to provide a defense, the insured is entitled to reimbursement of its defense costs. On the other hand, this remedy seems insufficient; the value on an insurer's participation in the defense of a case goes beyond well merely paying the legal fees. It includes advice, strategy, and a greater likelihood that the insurer will participate in a settlement. In an attempt to account for the intangible benefits of a defense, another approach to the consequence of an insurer's breach of the duty to defend is like a forfeiture; an insurer which wrongfully refuses to defend may give up its policy defenses.
Thomas, Jeffery E., "Consequences of an Insurer's Breach of the Duty to Defend: Columbia Casualty Co. v. HIAR Holdings, LLC in the Context of the ALI Restatement of the Law of Liability Insurance" (2012). Popular Media. 105.