WHAT DO YOU HAVE TO PROVE TO SUE YOUR OWN INSURANCE COMPANY IF THEY FAIL TO DEFEND YOU?
Sometimes the black letter law passed by the legislature is unclear. The legislature can’t anticipate every possible fact scenario when they pass a law, so it lay to the courts to interpret the law and give guidance to what it means. This interpretation is called case law. When the court decides a certain meeting to the law it essentially answers a legal question. Lawyers and other courts then can rely on that ruling when they have a similar issue in their case. The following case answers the question above.
Moore v. Commercial Union Insurance Co., 754 S.W.2d 16 (Mo. Ct. App. 1988).
This case addresses the following issue:
What does an insured have to prove to succeed in pursuing a claim for a breach of the duty to defend?
Insurance agreements generally contained two promises: that the insurance company will pay (indemnify) any judgment against an insured (subject to some limitations) and that the insurance company will pay for the attorney that defends the insured. Id. at 17-18. But what remedy is available when an insurance company fails to honor these promises? This case dealt with a failure to provide a legal defense for an insured sued for negligence. Id. at 17. The court ultimately outlined what would be necessary to successfully bring suit against an insurance company that wrongfully denied to provide a legal defense, but ultimately found that there was no duty to defend against the particular claim at issue here under the particular insurance contract signed by the parties. Id.
The Plaintiff in this case owned and leased buildings in St. Louis. Id. He contracted with Defendant for a general liability policy to cover his buildings. Id. In 1982, Plaintiff undertook upgrades and modifications of one building. Id. During the demolition phase of this project, debris fell from Plaintiff’s building and onto an adjoin property. Id. The debris caused serious property damage to the adjoining building and serious injury to the property’s owner. Id. The property owner filed suit against Plaintiff, alleging negligence against Plaintiff and the construction company he had hired. Id. Plaintiff notified Defendant and requested that Defendant provide an attorney to defend Plaintiff. Id. This request was denied, citing a provision that only provided coverage for actions occurring “on the insured premises.” Id. at 18. Plaintiff then filed suit against Defendant for breaching its duty to defend. Id.
The court noted that a lawsuit could exist to redress a breach of the duty to defend, if the plaintiff could show four things. Id. First, that a valid insurance policy existed. Id. Second, a lawsuit is filed against the insured. Id. Third, the insurer refuses to provide a legal defense for the insured. Id. Finally, the lawsuit filed falls with the scope of the insurance agreement. Id. This part is the most difficult, requiring the claim to be the correct type and arising during a time when the insurance policy was in effect. Id.
In this case, the Plaintiff’s claim failed on the last element, as most of these claims do. Id. The policy at issue only covered negligent acts that occurred on the insured property. Id. Basically, Plaintiff had insured his buildings, not himself. Id. Thus, negligent actions that occurred off the property where outside of the contract. Id. The court relied on this provision to find that the Defendant was right to refuse to provide a defense in the underlying claim. Id.