Insured Until Proven Guilty: An Insurer's Duty To Defend

Law360, New York (July 29, 2015, 10:33 AM EDT) -- When facing allegations of intentional harm that, once proven, might preclude coverage, policyholders should keep in mind that insurers must afford a defense until the allegations are proven and fall within an express, unambiguous exclusion to coverage. In certain circumstances, such as in the recent case described below, in which the insurer attempted to rely upon a form of a "prior knowledge" provision, policyholders should feel reassured that even "groundless, false or fraudulent" allegations will not jeopardize coverage for their defense. Also, insureds should keep in mind that courts may sometimes look to other policy provisions to limit or bar coverage entirely. This can result in traps for the unwary. Policyholders should therefore fully scrutinize their insurance policies to locate and account for any potential limitations or restrictions to coverage....

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