We Know How to Make Insurers Defend Their Insureds
Most people know that an insurance company must reimburse (indemnify) them if a covered claim is presented against them. But most people do not realize the other corresponding duty that a liability insurance policy imposes on the carrier — the duty to defend its insured.
The duty to defend can be more valuable than the duty to indemnify since the cost of defense, especially in complicated business cases, may exceed the verdict. Insurers know this, and do their best to skirt the duty to defend whenever they can. They issue reservation of rights letters that set forth the reasons for their refusal, and, if unchallenged, the insurer's disregard of its duty to defend can have a significant detrimental effect on an insured's ability to continue the litigation.
How many people or companies have unlimited funds to pay defense costs, even when their position is justifiable?
Rutter & Russin knows how to make insurers live up to their responsibility to defend their insureds.
In addition to the cases we have successfully handled, Bob Rutter has lectured about the duty to defend, and written an article entitled "A Lamb in Wolf's Clothing: The Insurer's Duty to Defend Business Torts."
Since the passage of Ohio’s latest intentional tort statute, insurers have routinely denied both a defense and indemnity to insureds under standard CGL and EPL policies. This case was slightly different since the policy provided a small sub-limit for the defense of employee intentional tort cases, but no duty to pay any settlement or judgment. The employee alleged that the employer had removed a guard from a machine, leading to the partial amputation of the employee’s hand. The employer sympathized with its long-time employee, and even offered to hire him back at a different job, but there was too much animosity and distrust. We got involved and worked with all three sides – employee’s counsel, employer’s personal counsel, and insurer’s counsel – to effectuate a settlement.
The insurance company took the position that it had no duty to defend its insured in a racial discrimination case because its EPL (Employer Liability Policy) did not cover such claims. The insured corporation settled the underlying discrimination lawsuit brought by its former employee and then hired Rutter & Russin to sue the insurance company for the cost of the settlement and its substantial attorney fees. Rutter & Russin demonstrated that the insurance company's coverage position was wrong, leading to a settlement of the lawsuit.
The property owner bought title insurance to protect him if any claims were made that challenged his clear title to the property that he had developed. Sure enough, a claim was asserted challenging an easement that had existed for many years. The title insurer said it would defend, but it never paid the insured's attorney fees as they grew larger and larger. By the time the underlying case was resolved, the fees exceeded $1 million. The insured turned to Rutter & Russin for help. It took a lawsuit, several depositions, and a few court hearings, but the title insurer—facing a bad faith claim—eventually resolved the claim for a confidential amount.
A Northeast Ohio accounting firm admittedly made a mistake, resulting in a multimillion-dollar claim being made against it. Unfortunately, the firm had an insurance policy with a lower limit and the insurance company raised several technical defenses that questioned whether it would pay anything. Facing financial ruin, the firm turned to Rutter & Russin for help in convincing the insurer to honor the claim and the former client to lower its expectations. The lawsuit was eventually settled within the insurance company's policy limits with no contribution from the insured.
The insured bar owner was sued when an intoxicated patron accidentally shot an innocent patron. The injured patron claimed that the shooter was over-served and was obviously intoxicated and should never had been allowed to enter the bar with a gun. The insurance company agreed to defend the bar owner, but asserted that it had no duty to indemnify the bar owner or settle the lawsuit. Rutter & Russin became involved and challenged the insurer's coverage position, resulting in a favorable settlement to which the bar owner did not have to contribute.
Several carriers refused to defend their insured when it was sued for conduct that the carriers did not feel was covered by their policies. The insured hired Rutter & Russin to vindicate its position, and the firm's work resulted in the court of appeals ordering the carriers to provide a defense.
A construction work site accident resulted in the tragic deaths of two men. Lawsuits were brought on behalf of the surviving family members against a number of entities, including an insured whose product — through misuse and poor maintenance — had resulted in the deaths. Because of the high exposure, the insured wanted its liability carriers to settle the cases, but the insurance situation was a mess. The insured, the contractor, and several sub-contractors all had their own commercial general liability policies; some had excess policies; some had umbrella policies; some of the policies contained indemnity obligations among several of the parties; some policies provided for a defense and some did not. The insurers were all pointing the finger at each other and nothing was moving forward toward a resolution. The insured brought in Rutter & Russin to straighten out the competing positions of the parties and the insurers, ultimately resulting in the successful settlement of the cases.