Paid Out Policy Limits Will Policy Provide Attorney
- Thread starter crphoneenglish
- Start date
?????
The carrier will provide legal defense until the policy limits are paid out, then they will suddenly stop. From this point on, you foot the bill.
This is probably the single biggest value of an umbrella. It's hard for an insurance company to write a $1M check without feeling obligated to see it through to conclusion.
Dan
The carrier will provide legal defense until the policy limits are paid out, then they will suddenly stop. From this point on, you foot the bill.
This is probably the single biggest value of an umbrella. It's hard for an insurance company to write a $1M check without feeling obligated to see it through to conclusion.
Dan
P&C is not my realm and it has been way too long since I studied insurance and risk management in college, but I find it hard to believe a carrier will pay to defend a policyholder once the statutory limits of the policy have been breached.
I have had a few, but not many, claims that exceeded the lifetime max on a major med policy. Once that limit is breached not only is there no more coverage but provider discounts go away since the claims are no longer a covered expense.
This situation seems to be similar and I would be surprised the carrier would be compelled, legally or otherwise, to pay for a defense when they are out of the game.
Appears as if state's have varying opinions on this issue.
American Service Insurance Co. v. China Ocean Shipping Company (Americas) Inc., 2010 WL 2487945 (1st Dist., June 16, 2010).
" (the judge) turned ASI's argument that, after depositing the policy limits with the court clerk, it was relieved of its duty to defend. ASI relied on policy language that it "will not defend any suit after it has paid the applicable limit of its liability for the accident which is the basis of the lawsuit."
Citing to Conway v. Country Casualty Insurance Co., 92 Ill. 2d 388 (1982), and other cases, Murphy said the Illinois courts have consistently held that an insurer cannot discharge its duty to defend by simply depositing policy limits with the court.
ASI contended, however, that American Standard Insurance Co. v. Basbagill, 333 Ill. App. 3d 11 (2002), supported its position. The policy language there was similar to that just quoted, and although the court ultimately held that the insurer there was not relieved of its duty to defend, it did so on the ground that the insurer had not fully relinquished control of the funds and that its payment was conditional. Here, by contrast, contended ASI, its tender of funds to the court was unconditional.
It also relied on Carolina Casualty Insurance Co. v. Estate of Studer, 555 F. Supp 2d 972 (S.D. Ind. 2008), where the court held that where the insurer has no potential obligation to indemnify – as is the case when it has exhausted – it can have no duty to defend. The court in that case therefore relieved the insurer of the obligation to defend.
Murphy, however, pointed out that Studer had not cited Conway, and that he was compelled to follow the holding of the Illinois Supreme Court. He also noted that ASI had not provided the defendants with a defense during the several years that the interpleader action was pending. He therefore concluded that ASI had a duty to defend.
You will need to read your policy. Then try to find out if your state has heard similar cases.
By the way ...define "hopeless". In what way?
American Service Insurance Co. v. China Ocean Shipping Company (Americas) Inc., 2010 WL 2487945 (1st Dist., June 16, 2010).
" (the judge) turned ASI's argument that, after depositing the policy limits with the court clerk, it was relieved of its duty to defend. ASI relied on policy language that it "will not defend any suit after it has paid the applicable limit of its liability for the accident which is the basis of the lawsuit."
Citing to Conway v. Country Casualty Insurance Co., 92 Ill. 2d 388 (1982), and other cases, Murphy said the Illinois courts have consistently held that an insurer cannot discharge its duty to defend by simply depositing policy limits with the court.
ASI contended, however, that American Standard Insurance Co. v. Basbagill, 333 Ill. App. 3d 11 (2002), supported its position. The policy language there was similar to that just quoted, and although the court ultimately held that the insurer there was not relieved of its duty to defend, it did so on the ground that the insurer had not fully relinquished control of the funds and that its payment was conditional. Here, by contrast, contended ASI, its tender of funds to the court was unconditional.
It also relied on Carolina Casualty Insurance Co. v. Estate of Studer, 555 F. Supp 2d 972 (S.D. Ind. 2008), where the court held that where the insurer has no potential obligation to indemnify – as is the case when it has exhausted – it can have no duty to defend. The court in that case therefore relieved the insurer of the obligation to defend.
Murphy, however, pointed out that Studer had not cited Conway, and that he was compelled to follow the holding of the Illinois Supreme Court. He also noted that ASI had not provided the defendants with a defense during the several years that the interpleader action was pending. He therefore concluded that ASI had a duty to defend.
You will need to read your policy. Then try to find out if your state has heard similar cases.
By the way ...define "hopeless". In what way?
Courts long ago decided it is within their purview to render decisions without regard to contractual language, including awarding judgments beyond the normal liability limits.
But it seems to me that requiring a carrier to pay what is essentially a non-contractual claim is different from saying they must also absorb legal fees.
But it seems to me that requiring a carrier to pay what is essentially a non-contractual claim is different from saying they must also absorb legal fees.
G
Guest
Guest
who cares what one court says, the next one on appeals will turn it over.....
gotta love the system.....
gotta love the system.....
G
Guest
Guest
The cost of legal defense does not reduce the limit of liability insurance in personal insurance, as well as, occurrence form commercial general liability. Therefore, if the judgement exceeds the applicable limit of liability insurance you will have to pay the difference out of your own pocket.
The cost of legal defense reduces the limit of insurance in claims made liability forms. Therefore, legal defense costs are a consideration when determining what amount of liability insurance to purchase.
The cost of legal defense reduces the limit of insurance in claims made liability forms. Therefore, legal defense costs are a consideration when determining what amount of liability insurance to purchase.
