contract-law business insurance
Would insurance company have duty to defend it&#39;s customer in unfair business claim case?
<p>So our business insurance company (mostly for accidents with customers and employees) is doing everything possible to not have cover our legal defense costs by coming up with various ruses. I have successfully fought off most of them. The most ridiculous ruse was where they tried to convince me that <a href="https://law.stackexchange.com/questions/47051/what-are-ones-options-if-he-is-incorrectly-listed-as-defendant-in-civil-lawsui?noredirect=1#comment90950_47051">our civil case</a> was actually a criminal case. Despite summons and complaint clearly stating that it is civil case.</p>

<p>The last excuse I am trying to fight off is where they claim that they don't do anything related to "unfair business practice" claims.</p>

<p>We already hired attorney to defend us in the civil lawsuit. He seemed to agree with our insurance company that they probably would not have to cover our legal defense costs.</p>

<p>However, I beg to differ. At least I found <a href="https://www.morrisonmahoney.com/blog/192-duty-to-defend-found-for-unfair-business-practices-claim" rel="nofollow noreferrer">this court ruling</a> in Massachusetts that is somewhat similar to our situation where court overruled vague language in insurance policy and decided that there was actually <a href="https://en.wikipedia.org/wiki/Duty_to_defend" rel="nofollow noreferrer">duty to defend</a>. Have not discussed this with my attorney as he charges per hour and at this time I would prefer that he focuses on the actual lawsuit, not insurance matters.</p>

<p><strong>Is there a practice in California to get business insurance companies to cover legal defense costs for lawsuits that make property damage claims due to unfair business practices? If yes, how to convince my insurance company that they are actually responsible for duty to defend us despite what insurance policy states or does not state?</strong></p>

<p>P.S. I don't think to answer this question one needs to see our insurance policy, because to my understanding courts overrule clauses in liability insurance contracts that create paradoxes. Imagine if you had auto liability insurance that stated that if you were drink&amp;driving, then insurance would not cover anything. What if plaintiff is a fraudster and knowingly filed a misleading complaint alleging that you were drunk (just like in our civil case plaintiff is misrepresenting relationship between <a href="https://law.stackexchange.com/questions/47051/what-are-ones-options-if-he-is-incorrectly-listed-as-defendant-in-civil-lawsui">us and other defendants</a>)? The insurance company would say "hey, the plaintiff in complaint stated you were drunk, so we don't have to help you out on this case by providing legal defense". What if defendant in discovery stage could disprove that he was drunk? Would insurance company suddenly become on hook to pay legal defense costs? What if defendants was poor, but with insurance, and could not afford to get the case to discovery stage without his insurance company's help? I believe this is the reason why courts put Duty to defend burden on insurance companies so that their customer would have fair chance of getting proper legal defense.</p>

<p>If the claim is one that could potentially be covered by the insurance policy then, yes, they have a duty to mount a defense (or negotiate a settlement). </p>

<p>However, if they do defend and liability is found and that liability is not covered by the policy then you must reimburse your insurer their costs.</p>

<p>You could appeal to the California Supreme Court ruling in <a href="https://cases.justia.com/california/supreme-court/2015-s211645.pdf?ts=1439226024" rel="nofollow noreferrer">Hartford Casualty v. J. R. Marketing</a>. The first sentence says</p>

<blockquote>
  <p>This court has long maintained that if any claims in a third party
  complaint against a person or entity protected by a commercial general
  liability (CGL) insurance policy are even potentially covered by the
  policy, the insurer must provide its insured with a defense to all
  claims.</p>
</blockquote>

<p>However, </p>

<blockquote>
  <p>the insurer may seek reimbursement from the insured of defense fees
  and expenses solely attributable to the claims that were clearly
  outside policy coverage</p>
</blockquote>

<p>A copy of the ruling could suffice to clarify the law.</p>
