A Video Explaining The Creation And Application Of The Duty To Defend

Duty to Defend

See the full video at https://youtu.be/Zys-LAUSNno

When liability insurance was first offered to the public it was concerned only with indemnity. As liability insurance developed, the concern about defense costs matured into clauses promising defense as well as indemnity—so-called dual-promise policies.

These clauses, although relatively recent, have led to the development of a considerable body of law interpreting the agreements to defend. To properly investigate a casualty or liability claim for defense and indemnity, an adjuster must understand the history of the promise to defend and understand how it grew from the original promise to indemnify.

In the leading case of Gray v. Zurich Ins. Co., 65 Cal.2d 263, 54 Cal. Rptr. 104 (1966) the Supreme Court of California set the basic rule followed in most jurisdictions for deciding whether an insurer owes a duty to defend or not. It found that insurers issuing dual-promise policies (a promise to both defend and indemnify) are required to defend any suit in which the re is a potentiality that the insurer will have to indemnify.

The insured in Gray was alleged to have assaulted and battered the plaintiff. The policy, and the statutes of California, prohibited indemnity for an intentional act of an insured. Assault and battery are, by definition, intentional acts, so the insurer argued that it owed no defense.