For the second time in two months, a federal court in Washington state has rejected an insurer’s attempt to avoid the consequences of its wrongful failure to defend its insured by effectively changing its mind and later—in this case much later—offering a defense. Continue Reading In Washington, insurers can’t “unring the bell” after wrongful denial of coverage

A recent decision from the U.S. District Court for the Western District of Washington again demonstrates the decidedly pro-policyholder nature of insurance-coverage law in the state of Washington. Like so many coverage cases, 2FL Enterprises, LLC v. Houston Specialty Insurance Co., arose from underlying construction-defect litigation. Continue Reading In Washington, an Insurer Cannot Refuse to Defend, Change Its Mind, and Still Expect to Control the Defense or Avoid Bad Faith

Nevada recently became the latest jurisdiction to protect the interests of policyholders by adopting the so-called Cumis counsel rule. In State Farm Mut. Auto. Ins. Co. v. Hansen (Sept. 24, 2015), the Nevada Supreme Court held that insurers are required to pay for independent counsel for insureds facing liability claims when there is a conflict of interest between the insured and insurer. In so holding, Nevada joined the list of states to ensure that policyholders have the benefit of being represented by counsel that has only the policyholders’ interests in mind—and not those of the insurer. Continue Reading Nevada Joins States Protecting Insureds from Lawyers Serving Two Masters

Broad and Ineffective “Reservation of Rights” Letter has Big Consequences

Insurers issue reservation of rights letters (“ROR Letters”) to contractors all the time. Typically, a contractor is sued, reports the claim, and one of the first responses from its insurer is an ROR Letter. They are generally long and regurgitate what seems like the entire policy without actually informing the contractor which provisions may actually matter in light of the allegations in the complaint.

The $5 Million ROR Letter

At least one court has held that ROR Letters that fit within this category can have big consequences that benefit insureds put in this unfair position. In Advantage Builders & Exteriors, Inc. v. Mid-Continent Cas. Co. (Mo. 2012), the court awarded $5 million in compensatory and bad-faith damages to a contractor arising from such an ROR Letter. Continue Reading Broad and Ineffective “Reservation of Rights” Letter has Big Consequences