“Insurers are finding that breaching their duty to defend comes at the risk of novel, unpredictable, and punitive remedies,” write Jonathan L. Schwartz and Colin B. Willmott, lawyers in Goldberg Segalla’s Global Insurance Services Practice Group.
“Even good faith coverage disputes are being harshly punished by courts through damages that stretch the limits of current jurisprudence and the reasonable needs of both parties. The driving force behind these penalties is the blurring of the previously well-established lines between the duty to defend, the duty to indemnify, and bad faith conduct.”
In this article, Jonathan and Colin explore the changing legal landscape surrounding the availability of atypical damages that insureds may now be able to seek when an insurer, in good faith, breaches the duty to defend. This article also discusses the American Law Institute’s Restatement of the Law of Liability Insurance project and its approach to punishing an insurer for its breach of the duty to defend.