Blog Archives

Should You Withdraw The Reservation of Rights To Avoid Entry of a Consent Judgment?

An insurer that defends its insured against a third party’s lawsuit, while reserving rights to deny coverage to its insured for any judgment, may face a decision point when underlying settlement discussions become ripe to resolve the case.  In some states, the insurer must decide whether to stand on its coverage defenses, or whether to withdraw its reservation of rights with the understanding that it will pay for the settlement within its policy limits and waive those defenses while it gains control over the settlement negotiations.  These decisions are among the greatest challenges, and are often the most time-sensitive issues, that third-party liability insurers may face when invited to participate in underlying mediations. One of the key factors influencing whether

Tagged with: , ,
Posted in Reservation of Rights

Reservation of Rights Letters Help Avoid Prejudice in the Third Party Context

When discussing bad faith in the third party context, most of the discussion properly centers on the duty to settle a claim.  However, other actions taken by a policyholder and carrier can have an impact.  The recent case of State Farm v. El-Moslimany provides a good example.  In El-Moslimany, State Farm found itself defending its policyholder from a defamation claim.  After defending for two years, State Farm filed a declaratory action, contending that the defamation claim at issue was not covered by its policy.  A year after filing the declaratory judgment action, State Farm filed a motion for summary judgment.  The policyholder responded, in part, claiming that State Farm’s attempt to withdraw from its defense obligation was “bad faith.”  The

Tagged with:
Posted in Reservation of Rights
Avoiding Insurance Bad Faith
Cozen O’Connor represents insurance clients in jurisdictions throughout the U.S. against statutory and common law first- and third-party extracontractual claims for actual and consequential damages, penalties, punitive and exemplary damages, attorneys’ fees and costs, and coverage payments. Whether bad faith claims are addenda to a broader coverage matter or are central to the complaint, Cozen O’Connor attorneys know how to efficiently respond to extracontractual causes of action. More
Editors
Cozen O’Connor Blogs