In First Mercury Insurance Co. v. First Florida Building Corp., et al.[AY1] , a federal district court ordered that an insurer had a duty to defend its insured against an underlying personal injury lawsuit. 2023 WL 23116, at *1 (M.D. Fla. Jan. 3, 2023). First Mercury is a cautionary tale about how insurers may try to circumvent their obligations by improperly considering extrinsic evidence when determining whether they have a duty to defend their insureds.
Continue Reading Insurer Could Not Rely on Extrinsic Evidence to Circumvent Its Duty to Defend  

In Sherwin-Williams Co. v. Certain Underwriters at Lloyd’s London, et al., the Court of Appeals for Ohio’s Eighth District, reversed the lower court, finding that money paid by the insured into an abatement fund was “damages” as that undefined term was used in the policyholder’s insurance policies. 2022-Ohio-3031, ¶ 1. Sherwin-Williams is a cautionary tale about how insurers may try to narrow the meaning of undefined terms in their insurance policies.
Continue Reading Court Finds That $400 Million Paid Into Abatement Fund Qualifies as “Damages” Under the Insured’s Policies  

In T.D. Williamson, Inc. v. Federal Ins. Co., the Tenth Circuit recently affirmed a lower court’s decision that an insurer did not have a duty to defend or indemnify its insured, a pipeline company, against a former director’s lawsuit. 21-5043, 2022 WL 1112530, at *1 (10th Cir. Apr. 14, 2022). According to the appellate court, the policy’s “insured vs. insured” exclusion barred coverage. This exclusion is common in D&O policies. The exclusion generally eliminates coverage for claims by or on behalf of one insured against another insured. For instance, the exclusion may bar coverage for claims by a company against one of its executives or by former or current executives against other executives of the same company. There are various versions of the exclusion, but they usually contain exceptions, which provide for coverage in specific situations. These exceptions are frequently the subject of coverage disputes.
Continue Reading Executive Protection Under D&O Policies and the Insured vs. Insured Exclusion

Liability insurance typically affords broad defense coverage.  But insurers sometimes reserve their right to challenge the insured’s right to a defense, or even outright terminate the defense.  When this occurs after the insurer has been in exclusive control of the defense, some courts recognize that the consequences can be catastrophic for the insured defendant.  Insurers, therefore, may be estopped from denying coverage where doing so will prejudice the insured.  This is exactly what transpired in RLI Ins. Co. v. AST Engineering Corp., No. 20-214 (2d Cir. Jan. 12, 2022), where the Second Circuit affirmed the district court’s decision that an insurer’s attempt to withdraw the defense it had provided to its insured for three years would prejudice the insured.
Continue Reading Defenses Raised Three-Years Too Late Estop Insurer’s Coverage Denial