In Babcock & Wilcox Co. v. American Nuclear Insurers, a divided Supreme Court of Pennsylvania, deciding an issue of first impression under Pennsylvania law, recently held that when an insurer defends its insured subject to a reservation of rights, the insured may accept a settlement over the insurer’s refusal where the settlement is fair, reasonable, … Continue Reading
Many insurers are in the habit of sending perfunctory “reservation of rights” letters to their insureds throughout the lifetime of a claim. The reason they do so is not a very well-guarded secret in the insurance industry. An insurer that acknowledges coverage must pay any eventual settlement or judgment, while an insurer that denies coverage … Continue Reading
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