In its April 2005 issue, ICLB published an article discussing the varying approaches courts have taken when addressing whether an insurer may conditionally defend its insured and later obtain reimbursement of defense costs if it is determined that a claim is outside the scope of coverage.
Recoupment Revisited: Why the Majority Should Adopt the Minority Position
In its April 2005 issue, <i>ICLB</i> published an article discussing the varying approaches courts have taken when addressing whether an insurer may conditionally defend its insured and later obtain reimbursement of defense costs if it is determined that a claim is outside the scope of coverage. <i>See</i> Pastor, Sherilyn: Insurers' Rights to Recoup Defense Costs, <i>Insurance Coverage Law Bulletin</i>, Vol. 4, No. 3 at p. 1 (Apr. 2005). As the issue was going to press, the Illinois Supreme Court issued an opinion rejecting the purported right of recoupment. <i>See General Agents Ins. Co. of Am., Inc. v. Midwest Sporting Goods Co.</i>, No. 98814, 2005 WL 674685 (Ill. March 24, 2005). Noting that its position was the "minority" view, the court in <i>General Agents</i> declined to recognize the so-called "right of recoupment" both as a matter of contract law and a matter of policy. (For an in-depth review of the <i>General Agents</i> decision, <i>see</i> Case Notes at p. 7.) The court was right on both counts.
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