SIRs and the duty to defend: their impact may be less than you think
Robert M. Waxman is a Partner in the Litigation Department, recently published an article on the Daily Journal, titled, "SIRs and the duty to defend: their impact may be less than you think".
A. The Separate Duties to Defend and Indemnify
The separate duties to defend and indemnify have long been cornerstones in third party liability insurance policies. The California Supreme Court explained both in the landmark case of Buss v. Sup. Ct. (1997) 16 Cal 4th 45-46. The Court noted that the "duty to defend runs [only] to claims that are actually covered [and] entails the payment of money in order to resolve liability." Id., at 45-46. Buss also stated that the "duty to defend runs to claims that are merely potentially covered [and] entails the rendering of a service, viz., the mounting and [immediate] funding of a defense in order to avoid or at least minimize liability." Id., at 46, 49, emphasis added. Subsequent California decisions confirm that importance of immediate insurer funding on the duty to defend. E.g., The Housing Group v. PMA Capital Ins. Co. (2011) 193 Cal. App. 4th 1150, 1156.