Liability Insurers Have a Duty to Defend
Miami Insurance Law Firm Liability insurance coverage is purchased to avoid the significant risks associated with a lawsuit, but insurance coverage does not always work out in a way that the policyholder might expect. Insurers maximize their profits by minimizing their time investment and other costs. It should therefore come as no surprise that liability insurers frequently deny coverage and skirt their plan-based responsibilities. This can put the policyholder in an incredibly vulnerable position, particularly if they do not have the assets necessary to resolve their liabilities without coverage. Among the insurer’s responsibilities is the “duty to defend.” Let’s take a closer look. Understanding the Duty to Defend Duty to Defend Requires Coverage Liability insurers are not required to step in and defend policyholders against third-party claims unless coverage would apply in the situation at-hand. The legal duty only activates in situations where the insurer could be responsible for the damages. For example, suppose that you have purchased a marine liability insurance policy. The policy precludes coverage in situations where you were intoxicated at the time of accident. If your insurer is not “on the hook” for damages due to your intoxication, then they have no duty to defend you in litigation against the third-party claimant. Bad Faith Conduct In Florida, insurers may be held liable for their bad faith conduct in relation to the duty to defend. Insurers may act in bad faith in a number of different ways, including the refusal to step in and defend their policyholder […]