Duty to Defend

One of the primary benefits of liability insurance policies is the peace of mind and security that comes from knowing that the insurer is obligated to defend its insured against potentially covered third party claims.  Campbell v. Superior Court (1996) 44 Cal.App.4th 1308, 1319. Under California law, the insurer’s duty to defend is very broad, extending to claims with only a “bare potential “of being covered. Montrose Chemical Corp. v. Superior Court (1993) 6 Cal.4th 287, 300.  An insurer has a duty to defend potentially covered claims even if the third party claims are groundless, false or fraudulent. The duty to defend is broader than the insurer’s duty to indemnify and may apply even in cases where no damages are ultimately awarded.

The insurance company’s duty to defend arises when the lawsuit is tendered to the insurance carrier or the carrier is put on actual or constructive notice of the lawsuit. Under California law, the insurer has a duty to immediately defend a potentially covered lawsuit. In a mixed action, where only some claims in the lawsuit are potentially covered and others are not covered, the insurance company is still obligated to defend the entire lawsuit. The duty to defend does not depend upon the titles of the causes of action included in the complaint and may be triggered by remote facts buried within the complaint.

The duty to defend depends on the allegations of the complaint, the terms of the insurance policy, and all facts known to the insurance company.