The New York Court of Appeals rendered a decision June 11, 2013 holding “when a liability insurer has breached its duty to defend its insured, the insurer may not later rely on Policy exclusions” to avoid indemnification.
The ruling in K2 Investment Group, LLC, et al v. American Guarantee & Liability Insurance Company, 2013 NY Slip op. 4270 (N.Y., June 11, 2013) will significantly affect an insurer’s assessment of its duty to defend a claim tendered under a liability policy. The court held an insurer may be deprived of the ability to contest coverage for the indemnity of a claim when it determines not to afford a defense to the insured.