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Commercial General Liability Policies and the Duty to Defend

Tue Dec 31st, 2019 on     Insurance Law,    

Experienced Insurance Litigation Lawyer in Miami, FL

Many Commercial General Liability (CGL) policyholders assume that their insurer will necessarily jump to their defense and provide the services that are required under their CGL policy.  The reality can be sobering.  Insurers will do everything they can to avoid additional losses, and this includes aggressive attempts to avoid having to engage their duty to defend the policyholder against third-party claims.  If the insurer is successful, this can put the policyholder in an unenviable position, forcing them to pay out-of-pocket for their own defense in the ensuing lawsuit.

CGL policies typically include a duty-to-defend provision that compels the insurer to step in and handle your defense in the event of third-party litigation.  But how do these obligations work, exactly?

Understanding the Duty to Defend

CGL insurers (where the policy includes a duty-to-defend) are obligated to handle their policyholder’s defense, and in some cases, to indemnify the policyholder if the case leads to damages.

In many cases, however, insurers fail these obligations:

  1. The insurer may argue that the claims at-issue are not entitled to coverage under the policy, and may refrain from providing a defense on that basis; or
  2. The insurer may handle your defense but may not perform their obligations reasonably under the circumstances.

With respect to (a), it’s worth noting that an insurer’s obligation to defend is based on the allegations in a lawsuit.  The insurer must provide a defense in the lawsuit even if there is only one allegation that is covered by CGL policy.  Whether the insurer can avoid having to defend the policyholder will be determined by the court, who will compare the allegations in the underlying lawsuit with the terms of the CGL policy at-issue.

With respect to (b), the insurer must provide adequate defense services.  They cannot forego hiring investigators, for example, if the nature of the accident necessitates independent factual investigation.  Similarly, insurers must consider settlement offers and accept a reasonable settlement when such a resolution is favorable to their policyholder.  If the insurer backs away from a reasonable settlement offer, that could lead to an independent bad faith claim against the insurer for failing to resolve the case.

Contact VPM for Legal Assistance

Here at Ver Ploeg & Marino, P.A., our team has decades of experience working with various clients — from individual professionals to large, multinational corporations — in challenging insurance disputes.  We are committed to helping our clients secure the compensation and services to which they are entitled pursuant to their insurance contract.

We are a client-centric firm that focuses on personalized advocacy.  As such, we engage closely with our clients through every stage of the dispute, from the initial facts investigation to trial litigation itself.  This close collaboration ensures that we have the detailed information we need to present a highly particularized, persuasive argument on your behalf.

Ready to speak to an experienced Miami insurance litigation lawyer at our firm?  Contact Ver Ploeg & Marino, P.A. to request a consultation.

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