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Insurance Law

There’s Been No “Tender” – Does Insurer Still Need To Respond?

We’ve all seen this issue. You are handling a claim for a certain insured, and in the course of doing so, you obtain information that another involved person or entity is also an insured and may have rights under the policy. But here’s the rub – this other person or entity has never tendered a claim. Does an insurer have to address coverage for them? Or can it sit back and take a “hey, if they want coverage they’ll ask us” position?

This issue is at the heart of Lincoln General Ins. Co. v. Ryerson & Son, Inc., No. 14C8446 (N.D. Ill. June 18, 2015), [subscribers can access an enhanced version of this opinion: | Lexis Advance]. The case itself is pretty complex and the opinion eye-glazing. At issue is coverage for a $27 million jury verdict involving personal injury sustained in a trucking accident. As the court put it: “[T]he various insurance companies are battling over who owes what.”

I don’t have the patience to untangle the case and there’s no real need to for purposes of making the points regarding the tender issue. In very broad strokes, one insurer argued that it had no actual notice of a potential coverage claim until ten years after the underlying lawsuit was filed. That being so, other insurers might be estopped from pursuing it now because their delay effectively robbed the insurer from controlling the defense. If, on the other hand, the insurer had actual notice when the underlying suit was filed, estoppel might apply against it for failing to take any action as to the insured.

I’m going to keep this brief and let the court do the talking. In general – putting aside the specifics of Ryerson -- the moral of the story is that an insurer that takes the “hey, if they want coverage they’ll ask us” position does so at its peril. Sitting back and waiting for a formal tender may estop an insurer from taking subsequent positions.

Here are some of the money paragraphs from the opinion:

“As to triggering the duty to defend, courts look to when the insurer knew (or should have known) that it was obligated to defend the insured. The easiest way for an insured to trigger the duty to defend is to tender the defense of the underlying action to the insurer. When this happens, there is no doubt as to when the insurer first had notice that it might be obligated to defend the insured.”

“But tendering the defense is not the only way for the duty to defend to be triggered; the duty is also triggered if the insurer has ‘actual notice.’ An insurer has actual notice only when two conditions are met: ‘the insurer must know ... that a cause of action has been filed against its insured and that the complaint falls within or potentially within the scope of the coverage of one of its policies.’ In most cases, knowledge of the underlying action, by itself, is not enough.”

Coverage Opinions is a bi-weekly (or more frequently) electronic newsletter reporting or providing commentary on just-issued decisions from courts nationally addressing insurance coverage disputes. Coverage Opinions focuses on decisions that concern numerous issues under commercial general liability and professional liability insurance policies. For more information visit

The views expressed herein are solely those of the author and not necessarily those of his firm or its clients. The information contained herein shall not be considered legal advice. You are advised to consult with an attorney concerning how any of the issues addressed herein may apply to your own situation. Coverage Opinions is gluten free but may contain peanut products.

    Randy Maniloff is Counsel at White and Williams, LLP in Philadelphia. He previously served as a firm Partner for seven years and transitioned to a Counsel position to pursue certain writing projects including Coverage Opinions . Nonetheless he still maintains a full-time practice at the firm. Randy concentrates his practice in the representation of insurers in coverage disputes over primary and excess obligations under a host of policies, including commercial general liability and various professional liability policies, such as public official’s, law enforcement, educator’s, media, computer technology, architects and engineers, lawyers, real estate agents, community associations, environmental contractors, Indian tribes and several others. Randy has significant experience in coverage for environmental damage and toxic torts, liquor liability and construction defect, including additional insured and contractual indemnity issues. Randy is co-author of “General Liability Insurance Coverage - Key Issues In Every State” (Oxford University Press, 2nd Edition, 2012). For the past twelve years Randy has published a year-end article that addresses the ten most significant insurance coverage decisions of the year completed.

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