DOCSLIB.ORG

The First Wave of Decisions Interpreting Employment Practices Liability Policies by Barbara A

Total Page：16

File Type：pdf, Size：1020Kb

Download full-text PDF Read full-text
The First Wave of Decisions Interpreting Employment Practices Liability Policies by Barbara A The First Wave of Decisions Interpreting Employment Practices Liability Policies By Barbara A. O’Donnell ou are in-house counsel for a manufacturing company with a national sales and distribution force aided by more than 150 employees and independent contractors. Over the past 20 years, the Y company has grown from a small operation, manufacturing only one product, to a midsize company offering a wide range of cus- tomized widgets. Today, Susan Brown, the vice president of sales, submitted a letter of resignation. In it, Susan claims that she has been forced to leave because the recently hired CFO has been “edging her out” by shifting several of her key responsibilities to Joe, the regional sales director who accompanied the CFO when he joined the company, and by excluding her from strategic decisions and important client meetings. Susan insists that the CFO embarked on his efforts to force her out after she complained about his imple- mentation of what she views as questionable accounting practices. Susan also claims that the new bonus structure, implemented about a year ago, violates the incentive compen- sation terms contained in the employment contract she signed in 1991, when she first joined the company. The president of the company is concerned that Susan will sue. He wants you to investigate and line up supporting witnesses. He also wants to know if the company has insurance coverage for her suit. What do you tell him? Variants on this situation have heightened risks that small and quate when applied against the become increasingly prevalent over large companies now face. Before broad range of claims and damages recent years. An explosion of the arrival of EPL, employers sought in employment practices employment practices liability sought coverage under their exist- claims. Designed to fill the gaps claims—presenting some combina- ing general liability insurance, left by other types of coverage, EPL tion of the constructive discharge, directors and officers liability policies provide employers with a whistle-blower, retaliation, dis- insurance (D&O), workers’ com- broad range of defense and indem- crimination, contract, and statu- pensation, and employer’s liability nification coverage for the most tory claims alluded to above—led policies for protection against prevalent types of discrimination, the insurance industry to develop employee suits. More often than retaliation, and wrongful discharge employment practices liability not, these traditional sources of claims brought under common-law insurance (EPL) to meet the insurance coverage proved inade- and statutory theories, subject to Volume 35 • Number 1 • Fall 2005 • American Bar Association • The Brief “The First Wave of Decisions Interpreting Employment Practices Liability Policies” by Barbara A. O’Donnell, published in The Brief, Volume 35, No. 1, Fall 2005 © 2005 by the American Bar Association. Reproduced by permission. All rights reserved. This information or any portion 1 thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association. potential exclusions for certain the company delayed in providing comprehensive protections or an types of relief, such as punitive notice of Susan’s claim, perhaps endorsement to D&O or other pol- damages, fines, or penalties. because it wanted to negotiate a sep- icy forms that may offer more Over the past decade, more and aration agreement with her? What if restricted coverages. Businesses more employers have added EPL to the company knew of the potential whose employees frequently deal their insurance portfolio. The exposure to claims arising out of its with third parties, including cus- increasing reliance on EPL appears accounting practices when it tomers or vendors, outside of the justified. The Equal Employment and applied for EPL but replied “none” workplace can purchase third-party Opportunity Commission (EEOC) when asked in the insurance appli- endorsements that extend EPL reports that it received 79,432 new cation to disclose any circumstances coverages to harassment or other Title VII, Americans with that might be reasonably expected claims arising out of the employees’ Disabilities Act, Age Discrimination to give rise to claims. As with any interactions with these third par- in Employment Act, and Equal Pay other form of insurance, disputes ties. Companies that depend on Act charges in fiscal year 20041 and over the scope and meaning of EPL nontraditional workers, such as awarded monetary benefits totaling policy provisions and exclusions are independent contractors or con- $168.1 million during that year.2 inevitable. Because EPL insurance sultants, need to make sure their Even though EPL has gained wide- remains relatively new, however, policy encompasses claims by and spread use, the policy forms continue courts and practitioners have had to against these persons. to vary in important respects with rely on decisions concerning other Given these variations, it is not the result that employers and their types of policy forms when address- surprising that several EPL deci- advisors must carefully review the ing disputes under EPL policies. sions concern disputes over the EPL policy in conjunction with any With EPL insurance now gain- scope of the basic coverage grant other sources of insurance to ensure ing widespread use by companies of or insuring clause in the applicable that coverage for the specific types of all sizes across a host of industries, policy form. The dispute in Peoples risks faced by that business is as com- courts are starting to adjudicate Mortgage Corp. v. Kansas Bankers prehensive as possible. disputes under these types of poli- Surety Co.3 concerned an EPL pol- In the scenario above, for exam- cies. By reviewing these decisions, icy purchased in 1999 that covered ple, the company’s EPL policy would employers, their counsel, and risk related banking entities in Kansas, probably provide defense and managers can gain useful insights Colorado, and New Mexico. The indemnification coverage for any into important ways to avoid sig- policy’s liability limit was $250,000 retaliation, constructive discharge, nificant coverage gaps and maxi- for all loss, including defense costs. whistle-blowing, and gender dis- mize the protections offered by Using novel language drafted by crimination claims but might not EPL policies. While there may be the insurance company president cover the contract claim, depending no surprises in the emerging body and vice president, the policy on whether the EPL policy contains of EPL decisions for those familiar stated that the insurer would a common exclusion for breach of with coverage doctrines developed defend and indemnify the bank contract claims. Even if coverage through judicial interpretation of “for up to a maximum of one year was available for the range of claims D&O or other types of wrongful of claimant’s salary which the posed by this scenario, the policy act or errors and omissions policies, Bank is legally obligated to pay by might contain limitations on the it is useful to examine how courts reason of any actual or alleged type of relief covered and might apply these concepts when inter- Wrongful Act arising out of the exclude (or provide sublimits for) an preting EPL policy terms, condi- Employment Claim first filed award of punitive damages. What if tions, and exclusions. against the Bank during the Policy Susan sought to recover the value of Period.”4 The policy defined stock options? How would coverage Basic EPL Insuring “employment claim” to include vary if the claims were brought by, Clause Disputes civil or arbitration proceedings or against, an independent contrac- Insurers offer a wide range of EPL brought by past or present employ- tor rather than an employee? What products, with options to purchase ees for any wrongful act, as obligations would the insurer have if a stand-alone policy offering more defined, in connection with an Volume 35 • Number 1 • Fall 2005 • American Bar Association • The Brief “The First Wave of Decisions Interpreting Employment Practices Liability Policies” by Barbara A. O’Donnell, published in The Brief, Volume 2 35, No. 1, Fall 2005 © 2005 by the American Bar Association. Reproduced by permission. All rights reserved. This information or any portion thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association. actual or alleged wrongful dis- salary.6 In reaching this conclusion, implied covenant of good faith and missal, breach of a verbal or writ- the court noted that the policy also fair dealing, as well as for breach of ten employment contract, afforded coverage for claims the contract; and (2) the award workplace harassment, failure to brought by former employees and included damages for stock options promote, or wrongful discipline. applicants, and explained that granted to the employee in a para- The bank sought coverage for damages awarded to those graph of his employment agree- $175,000 paid to settle a lawsuit claimants could never be “compen- ment that was separate from the brought by a former employee, sation for services rendered,” provisions addressing his annual Gomez, who sought to recover which was what the bank con- salary. Affirming summary judg- approximately $329,000 owed tended was meant by salary.7 The ment for the insurer, the Ninth under an alleged employment court also rejected the insurer’s Circuit Court of Appeals held that agreement that allowed him to contention that the policy at most the policy unambiguously excluded recover 150 percent of his taxable covered the payment of Gomez’s coverage for the arbitrator’s award income for the preceding year. $40,000 base salary and not the because it awarded damages proxi- While employed, Gomez had additional amounts paid in the set- mately caused by breach of the received a $40,000 annual salary tlement for commission income.
Load more

Recommended publications
  • Duty to Defend Compendium: Pennsylvania
    Pennsylvania By Bridget M. Gillespie and R. Brandon McCullough What triggers an insurer’s must look to the facts alleged in the underlying com- duty to defend? plaint, not the cause of action pled.”), appeal denied, An insurer has a duty to defend its insured if the 598 Pa. 769, 956 A.2d 436 (2008). When considering factual allegations of the underlying complaint whether there is a duty to defend, the factual allega- “encompass an injury that is actually or potentially tions of the complaint against the insured must be within the scope of the policy.” American & Foreign accepted “as true and liberally construed in favor of Ins. Co. v. Jerry’s Sport Ctr., Inc., 606 Pa. 584, 609, the insured.” Jerry’s Sport Ctr., 606 Pa. at 610, 2 A.3d 2 A.3d 526, 541 (2010) (citations omitted). This is at 541 (quoting Frog, Switch & Mfg. Co., Inc. v. Trav- determined by “comparing the four corners of the elers Ins. Co., 193 F.3d 742 (3d Cir. 1999)). In addi- insurance contract to the four corners of the com- tion, all doubts and ambiguities in policy language plaint.” Id. (citation omitted). Therefore, “an insurer must be resolved in favor of the insured. Id. at 608, 2 may not justifiably refuse to defend a claim against A.3d at 540 (citations omitted). its insured unless it is clear from an examination of The language of the notice provision in the pol- the allegations in the complaint and the language of icy at issue and the facts surrounding the notice the policy that the claim does not potentially come will determine the sufficiency of notice to trigger a within the coverage of the policy.” Id.
    [Show full text]
  • 1 United States District Court Eastern District Of
    Case 2:11-cv-02375-SM-DEK Document 511 Filed 07/12/17 Page 1 of 26 UNITED STATES DISTRICT COURT EASTERN DISTRICT OF LOUISIANA HANOVER INSURANCE COMPANY, CIVIL ACTION Plaintiff No. 11-2375 c/w VERSUS 14-1930, 14-1933, 16-2490 SUPERIOR LABOR SERVICES, SECTION “E” INC., ET AL., Defendants Applies to: 16-2490 ORDER AND REASONS Before the Court is a motion for summary judgment filed by Great American Excess & Surplus Insurance Company (“Great American”) regarding its duty to defend and duty to indemnify Allied Shipyard, Inc. against claims made in the underlying St. Pierre state-court lawsuit, more fully described below, as an additional insured under Masse’s policies.1 Allied opposes the motion.2 For the reasons set forth below, Great American’s motion is GRANTED. BACKGROUND A. State-Court Lawsuits This is a consolidated action. The case originates from two personal-injury actions (“State-Court Lawsuits”) filed in state court against Allied Shipyard, Inc. (“Allied”): Adams, et al. v. Allied Shipyard, Inc., et al. and St. Pierre, et al. v. Allied Shipyard, Inc.3 The plaintiffs in the State-Court Lawsuits allege Allied negligently performed 1 R. Docs. 447. Unless otherwise indicated, “R. Doc.” refers to record documents in the consolidated matter, No. 11-2375. The caption of Great American’s motion for summary judgment indicates the motion applies to Nos. 14-1933 and 16-2490. Great American is no longer a party in 14-1933. 2 R. Doc. 449. 3 R. Docs. 444-3, 444-4, 444-5, 444-6, 444-7, 444-8, 444-9 (Adams Petitions for Damages); R.
    [Show full text]
  • Riddle Butts
    Riddle& Butts, LLP Fiduciary Handbook for Estates A NOTE FROM THE TEAM Introduction Christine served Harris County as Judge of Probate Court 4 from 2011 to 2018. Thank you for taking the time to familiarize yourself with the information in this handbook. The purpose of this handbook John Portnow is a 2011 graduate of Suffolk University Law is to serve as a reference guide, highlighting specific issues School. He also holds a LL.M. in Taxation from Temple Uni- and requirements necessary to administer an estate. We hope versity School of Law and a B.A. in English from Yeshiva the information provided enhances your understanding of this University, where he graduated Magna Cum Laude. John has process. Should you be appointed as Executor or Administra- experience consulting with respect to federal and state tax tor of an estate, this handbook will assist you in serving in audits and tax litigation. such capacity in a thoughtful and competent manner. If you have additional questions or concerns, your attorney and our staff are available to provide assistance. About the Team Michael C. Riddle began his practice of law as a gift and estate tax attorney for the Internal Revenue Service. He grad- uated from the University of Houston Law School in 1972 and in 1991 became Board Certified by the Texas Board of Legal Specialization in Estate Planning and Probate. He has been guest speaker for 30 years on Christian radio station KHCB 105.7. He is the Managing Partner of Riddle & Butts, LLP and has been practicing law in Harris County and sur- rounding counties for almost 40 years.
    [Show full text]
  • Download Firm Brochure
    REPRESENTATION THROUGH EXPERIENCE, DIVERSITY & CREATIVITY INNOVATIVE SOLUTIONS TO CHALLENGES THAT FACE OUR CLIENTS Resnick & Louis, P.C. retains an unparalleled team of professionals with diverse backgrounds from across the United States and abroad. Our experienced attorneys We Offer A Partner are licensed in multiple jurisdictions and are well versed in all aspects of negotiation, arbitration, mediation, trial Committed To and resolution of litigated and non-litigated matters. We consistently approach each case differently, finding and Your Goals focusing on the strategies that will achieve the most beneficial results for each client. We continuously involve our clients in our process to ensure their needs are met throughout their entire experience, and take pride in being highly responsive to our clients’ requests. It is our goal to maintain direct and open communication in order to ensure their satisfaction. Our law office is staffed with hardworking and efficient individuals who care about every case and are able to manage a wide variety of tasks for our clients. It is this value-added approach that sets us apart from other law firms in the locations we serve. FIRM OPERATOR: 866.800.5040 / RLATTORNEYS.COM A GLOBAL NETWORK OF OUTSTANDING PROFESSIONALS Resnick & Louis P.C. has offices within major U.S. metropolitan areas of Arizona, California, Colorado, Florida, Mississippi, Nevada, New Mexico, South National and Carolina, Texas, and Utah and internationally in the United Kingdom. Additionally, many of our attorneys International have licenses in other states. Footprint We provide statewide representation throughout our jurisdictions and maintain an outstanding network of consultants, expert witnesses, and other professionals who are available to assist in our clients’ cases.
    [Show full text]
  • Employment Practices Liability Insurance (EPLI) Policies and Coverage
    Resource ID: w-006-7127 Employment Practices Liability Insurance (EPLI) Policies and Coverage JOSEPH M. GAGLIARDO AND SARA P. YAGER, LANER MUCHIN, LTD., WITH PRACTICAL LAW LABOR & EMPLOYMENT Search the Resource ID numbers in blue on Westlaw for more. A Practice Note discussing employment practices Commercial General Liability Insurance Policies: Property Damage and Bodily Injury Coverage (Coverage A) (9-507-2539). liability insurance (EPLI) policies and coverage Commercial General Liability Insurance Policies: Personal and issues for employers. It covers EPLI’s key Advertising Injury Coverage (Coverage B) (0-507-2567). characteristics, benefits to employers, scope of Directors and Officers Liability Insurance Policies (2-504-6515). coverage, and common policy provisions. It also For a collection of insurance-related resources, see Insurance Policies includes practical considerations for employers and Coverage Toolkit (4-506-1171). obtaining EPLI policies. This Note contains OVERVIEW OF EPLI POLICIES general information and is jurisdiction neutral. EPLI is a form of insurance that employers can obtain for certain employment practices liability. It generally covers claims alleging that the employer engaged in unlawful conduct in connection with Employment practices liability insurance (EPLI) policies allow the employment relationship, including claims by individuals such as: employers to mitigate risk and reduce the costs associated with Employees. certain employment-related claims and litigation. EPLI policies are Former employees. a relatively new insurance offering and have become increasingly popular because of: Applicants for employment. The rising volume and costs of employment practices litigation. Certain EPLI policies also may cover claims made by the Equal The employment practices exclusions added to many other Employment Opportunity Commission (EEOC) on behalf of these insurance policies.
    [Show full text]
  • An Overview of Indemnification and the Duty to Defend
    AN OVERVIEW OF INDEMNIFICATION AND THE DUTY TO DEFEND Indemnification & Duty to Defend Subcommittee, ACEC Risk Management Committee Subcommittee Chair Theodore D. Levin, P.E., Attorney Morris Polich & Purdy LLP Subcommittee Members Karen Erger, Vice President, Director of Practice Risk Management Lockton Companies, Inc. Albert Rabasca, Director of Industry Relations XL Specialty Insurance Company Homer Sandridge, Underwriting Director, Professional Liability Travelers Insurance Creighton Sebra, Attorney Morris Polich & Purdy, LLP Principles and History One of the most basic principles of tort law is that every person should be responsible for damage that they have caused. Many states have reduced this concept to statute, each stating almost word for word that “Indemnity is a contract by which one engages to save another from a legal consequence of the conduct of one of the parties, or of some other person.”1 In many lawsuits, a plaintiff’s damages are caused by the convergence of several contributing factors originating from several different sources. To give one common example, a plaintiff homeowner alleging property damages resulting from construction defects may assert claims in one lawsuit against any of the diverse parties that contributed various scopes of work to the project, including the general contractor, subcontractors and trades that contributed to the defective work, as well as design professionals such as civil engineers, architects, and structural engineers. To put it even more bluntly, the owner files one suit against everyone in sight. In practice, however, the plaintiff more often merely sues the party or parties with whom he or she contracted, and lets the named defendant(s) do the legwork to identify and sue other parties that may also be responsible.
    [Show full text]
  • Duty to Defend and Duty to Indemnify Checklist by Daniel Cotter, Howard & Howard Attorneys PLLC
    Duty to Defend and Duty to Indemnify Checklist by Daniel Cotter, Howard & Howard Attorneys PLLC This Duty to Defend and Duty to Indemnify checklist addresses the major duties an insurer commits to under an insurance policy. The duty to defend describes an insurer’s obligation to provide an insured a defense to claims made under a policy. The duty to indemnify describes an insurer’s obligation to pay a claim for loss or damage against an insured. For additional insight into these concepts, see Duty to Defend and Duty to Indemnify; Insurer Duty-to-Defend Standard State Law Survey. The Starting Point Counsel giving advice to clients, whether the policyholder or the insurer, must start by obtaining the insurance contract. Insurers draft special contracts, called insurance policies, providing certain coverages to insureds and certain duties by insurers in the event of a covered loss. Covered loss will be defined in each type of policy and will vary based on the type of policy sold to an insured. The two major duties that an insurer finds itself obligated to an insured for are the duty to defend and the duty to indemnify. Finding the Two Duties The duty to defend is a term that describes an insurer’s obligation to provide an insured with a defense to claims made under an insurance policy. The duty to indemnify describes an insurer’s obligation to pay a claim for loss or damage against an insured. Both are typically included in a policy’s insuring agreement. Basics of an Insurance Policy and the Duties The duty to defend and the duty to indemnify are primarily found in liability policies—those with third party coverage implications.
    [Show full text]
  • October 16, 1997
    Spring Meeting May 19-21, 1999 Randolph W. Hall Assistant City Attorney City of Oakland WHEN CAN A CITY REFUSE TO DEFEND AND INDEMNIFY AN EMPLOYEE? TABLE OF CONTENTS I. INTRODUCTION II. LEGAL FRAMEWORK A. The California Tort Claims Act B. The Duty To Defend C. Grounds For Refusing To Provide A Defense To The Public Employee D. The Duty To Provide Indemnification E. An Employee’s Private Automobile Insurance Policy May Satisfy The Public Entity’s Duty To Indemnify The Employee From Damages And Costs Arising From A Motor Vehicle Accident That Occurred During The Course And Scope Of Duty F. What Constitutes “Scope of Employment” And How Do We Analyze Whether An Act Or Omission Is Within The Scope of Employment? G. A Risk Is Inherit In, Or Created By, A Public Entity’s Operations If The Occurrence Was A Generally Foreseeable Consequence Of The Entity’s Operations H. Scope Of Employment Is Broadly Interpreted Under The Respondent Superior Doctrine I. An Employer Is Not Strictly Liable For All Actions Of Its Employees During Working Hours J. Vicarious Liability Arising Out Of Scope Of Employment K. Imposition Of Vicarious Liability Is Not Appropriate Where The Misconduct Does Not Arise From The Conduct Of The Employer’s Enterprise L. The Standard For Determining Whether A Risk Is “Unusual Or Startling” For Respondent Superior Analysis M. A Municipality’s Decision To Defend Some Employees In A Given Matter Does Not Create A Duty To Defend All Employees Named As Defendants In That Or Other Matters III. CONCLUSION [I wish to thank my colleagues Karen Rodrigue and Sophia Li who contributed to the preparation of this paper.
    [Show full text]
  • Overview of Critical 2010 Developments
    Overview of Critical 2010 Developments Squire, Sanders & Dempsey L.L.P. Brian E. Shield Casey J.T. McCoy Stacie D. Yee [email protected] [email protected] [email protected] Squire, Sanders & Dempsey L.L.P. | www.ssd.com Wage and Hour/Class Action Updates Casey J.T. McCoy Squire, Sanders & Dempsey L.L.P. Squire, Sanders & Dempsey L.L.P. | www.ssd.com Tips on Tips • Cumbie v. Woody Woo held that mandatory tip pools did not violate the FLSA so long as no tip credit is taken by the employer. • Lu v. Hawaiian Gardens Casino held employees do not have a private right of action under Labor Code § 351 but observed that tort remedies such as conversion may be available. • Stay tuned for a lot more claims related to how money is calculated and paid as the number of exemption-based wage and hour cases starts to diminish. Squire, Sanders & Dempsey L.L.P. | www.ssd.com Off Site Work and Data Transmission • Rutti v. Lojack – Technician sued for payment for travel time and time spent before and after driving to his jobs. The Court found the driving time was not compensable, nor time spent mapping out each days’ route but did say the employer might be liable for time spent at the end of the day transmitting reports because it may have taken more than 10 minutes per day. Squire, Sanders & Dempsey L.L.P. | www.ssd.com A Meal is a Meal • McFarland v. Guardsmark – Employee sued for unprovided duty free second meal breaks arguing that if the first meal break is an on-duty break, that is akin to a waived meal break so the employer cannot get employee waiver of the second break.
    [Show full text]
  • Current Index to Legal Periodicals
    CURRENT INDEX TO LEGAL PERIODICALS Marian Gould Gallagher Law Library University of Washington Nikki Pike, Managing Editor Ingrid Holmlund & Tania Schriwer, Editors Alena Wolotira, Executive Editor Copyright 2017, Marian Gould Gallagher Law Library University of Washington School of Law Key to Citations——November 3, 2017 ABA Journal of Labor & Employment Law 32 A.B.A. J. Lab. & Emp. L., No. 3, Spring, 2017. Alabama Civil Rights and Civil Liberties Law Review 8 Ala. C.R. & C.L. L. Rev., No. 2, Pp. 163-308, 2017. American Journal of Legal History 57 Am. J. Legal Hist., No. 3, September, 2017. American Review of International Arbitration 28 Am. Rev. Int’l Arb., No. 1, Pp. 1-189, 2017. Antitrust Law Journal 81 Antitrust L.J., No. 1, Pp. 1-336, 2016. Boston University Journal of Science & Technology Law 23 B.U. J. Sci. & Tech. L., No. 2, Summer, 2017. Business Lawyer *72 Bus. Law., No. 3, Summer, 2017. California Law Review 105 Cal. L. Rev., No. 4, August, 2017. Colorado Technology Law Journal 15 Colo. Tech. L.J., No. 2, Pp. 257-548, 2017. Columbia Business Law Review 2017 Colum. Bus. L. Rev., No. 2, Pp. 453-858. Columbia Journal of Law and Social Problems 50 Colum. J.L. & Soc. Probs., No. 4, Summer, 2017. Creighton Law Review 50 Creighton L. Rev., No. 4, September, 2017. Employee Rights and Employment Policy Journal 21 Employee Rts. & Emp. Pol’y J., No. 1, Pp. 1-220, 2017. Florida A&M University Law Review 11 Fla. A&M U. L. Rev., No. 2, Spring, 2016.
    [Show full text]
  • Duty to Defend and Duty to Indemnify
    Duty to Defend and Duty to Indemnify Go to: Basics of an Insurance Policy | The Insuring Clause | Duty Triggers | Burden of Proof | The Duty to Defend | The Definition of Suit | Importance of the Duty to Defend | Texas and Duty to Defend | The Duty to Indemnify | Settlement of Claim | The Reservation of Rights | Steps for the Policyholder Practitioner | Steps for the Insurer Practitioner | Related Content Current as of: 12/11/2019 by Daniel Cotter, Howard & Howard Attorneys PLLC This practice note addresses the two major duties that an insurer commits to providing under an insurance policy— the duty to defend and the duty to indemnify. Insurers draft special contracts, called insurance policies, providing certain coverages to insureds and certain duties by insurers in the event of a covered loss. Covered loss will be defined in each type of policy and will vary based on the type of policy sold to an insured. The two major duties that an insurer finds itself obligated to an insured for are the duty to defend and the duty to indemnify. The duty to defend is a term that describes an insurer’s obligation to provide an insured with a defense to claims made under an insurance policy. The duty to indemnify describes an insurer’s obligation to pay a claim for loss or damage against an insured. For additional insight into these concepts, see Duty to Defend and Duty to Indemnify Checklist; Insurer Duty-to- Defend Standard State Law Survey. Basics of an Insurance Policy The duty to defend and the duty to indemnify are primarily found in liability policies—those with third-party coverage implications.
    [Show full text]
  • Duty to Defend and Duty to Indemnify a Distinction with a Difference
    Duty to Defend and Duty to Indemnify A Distinction with a Difference By E. Tyron Brown Hawkins Parnell Thackston & Young LLP Atlanta, Georgia 30308 [email protected] INTRODUCTION The contractual duties to defend and indemnify are two of the most important types of allocation of risk in construction contracts. A typical contract provision containing a duty to defend and a duty to indemnify states as follows: To the fullest extent permitted by law . (Indemnitor) shall indemnify, defend and hold harmless (Indemnified Parties) from and against any and all liabilities, claims, demands, causes of action, administrative or regulatory proceedings, liens, settlements, judgments and expenses, including, but not limited to, reasonable attorney’s fees and investigative costs, directly or indirectly resulting from . injury . .or property damage arising out of or in connection with the performance of the Work of (Indemnitor), its agents, servants, employees, or independent contractors retained or hired by (Indemnitor). Although these two legal concepts are related and may be contained in the same paragraph, it is important to distinguish between the duty to defend and the duty to indemnify. A duty to defend is a separate, independent obligation from a contractual duty to indemnify. Ashton Park Trace Apts. v. City of Decatur, 2015 U.S. Dist. LEXIS 185688, *14 (N.D. Ga. 2015); see ALEA London Ltd. v. Woodcock, 286 Ga. App. 572, 578-79 (2007). Attorneys representing a party with a contract containing a duty to defend and indemnify provision should diligently analyze the distinct applications, triggers, rights, and obligations of these two separate legal concepts. DUTY TO DEFEND The duty to defend is broader than the duty to indemnify.
    [Show full text]