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Written by David O’Neill, JD
Director of Investigations, PolicyFind
The California Supreme Court recognized an insurer’s right to recoup defense costs for claims proven to be non-covered in its 1997 holding in Buss v. Superior Court.1 Finding precedent in state law for the rule that an insurer’s duty to defend in a commercial general liability (“CGL”) insurance policy is indeed broader than its duty to indemnify, the Supreme Court singled out an issue before it as one of first impression. The issue to be determined was whether the insurer’s costs in exercising its duty to defend could be passed to the policyholder should claims defended later be determined to include those for which coverage did not apply.
Basing its decision on contractual principles, the Buss court opined that because the insurer had defended potentially uncovered claims, the policyholder had received a benefit for which it had not bargained. It found that the insurer’s right to recoup these defense dollars was implied in law even if not expressly stated in the insurance contract. Continue reading “Does Buss Stop Here? California’s Insurer Right to Recoup Rejected by Other State Courts”