Pennsylvania Supreme Court Declares Insurance Defense Costs May Not Be Reimbursable
Posted by Elise M. Carlin on December 02, 2010
Your company is sued as a result of an alleged constructive defect. You tender the claim to your insurance company and they hire and pay for a lawyer to defend your company. It is later determined that there is no insurance coverage for the construction defect claim. Can the insurance company force your company to reimburse it for all the costs that it spent in defending the action? The answer depends on the language contained in your insurance policy.
Recently, the Pennsylvania Supreme Court determined that an insurer who assumes an insured’s defense is forbidden from seeking reimbursement of defense costs from the insured unless the policy specifically permits it to do so.