Does It Really Matter Who Pays?

After a liability insurance company denies coverage for a lawsuit filed against its policyholder, the policyholder is left to manage the defense and settlement of the lawsuit. Sometimes, the policyholder is forced to, or elects to, have another person or entity pay for the defense fees, settlement, or judgment. This leads to the inevitable question of whether the policyholder can recover from its liability insurer sums paid for defense fees, settlement, or judgment if, after the insurance company has wrongfully denied coverage, the policyholder's defense bills, settlement, or a judgment are paid for by a non-insured person or entity. While it should not matter who pays once a liability insurer has breached its contract, some courts have denied policyholders recoveries when a non-insured third-party steps in for the breaching liability insurer and pays the policyholder's defense fees, a settlement, or the judgment.

24 minute read May 30, 2006 at 02:57 PM

By

Andrew M. Reidy