Insurers Have No Duty to Defend Insured Absent a Request for Coverage


In general, an insurance company has a duty to defend a policyholder when they are subject to litigation. However, as evidenced by a recent case in the Fifth Circuit, this duty is not unlimited. The policyholder must notify the insurance company of the lawsuit and specifically, request the insurance company defend them in the litigation. If the insured does not ask, the insurance company owes them no duty to defend. One recent defendant in a personal injury lawsuit learned that lesson the hard way. The duty to defend and indemnify must be triggered for it to exist in the first place.

In the case of Moreno v Sentinel Insurance Company, a homebuilder had subcontracted with a painter to work on homes in one of its developments. One of the house painters was seriously injured when he fell from a ladder. The injured painter sued both the homebuilder and the painting company, seeking damages. The homebuilder immediately notified the insurance company of the lawsuit as a secondary insured under the policy. The homebuilder reached a separate settlement with the injured painter and was removed from the lawsuit.

The Painting Company Defendant Chose to Proceed on its Own

The painting subcontractor immediately retained an attorney and began to defend itself from the lawsuit. The painting company did not notify its insurance company after it was served with lawsuit papers. It proceeded to defend the case as if it did not have insurance at all. Even though the insurance company knew about the lawsuit from the homebuilder, it never received formal notice about it from the painting subcontractor. The insurance company even went so far as to attempt to contact the painting subcontractor to discuss the claim. Not only did the painting company ignore the insurance company, but its attorney also did not respond to requests from the insurance company to discuss the case.

When the attorney finally did speak with the insurance company, he informed them that he was hired to represent the painting company because it did not believe that the injury was covered under the policy because the injured painter was an employee of the painting company. The insurance company notified the painting company that it would not defend the claim, nor was it obligated to indemnify against it.

The Painting Company’s Attorney Continued to Work Independently of the Insurance Company

Even after that conversation, the attorney continued to represent the painting company. Eventually, without any input from or notice to the insurance company, the painting company agreed to a $1.6 million settlement with the injured painter. The settlement happened in spite of the provision of the insurance policy that required notice to the insurance company. The settlement stated the injured painter was an independent contractor and not an employee of the painting company. The painting company never requested the insurance company cover the cost of the settlement.

As a third-party beneficiary, Moreno, the injured painter, filed a lawsuit against the insurance company seeking payment under the settlement agreement. The district court granted summary judgment in favor of the insurance company. Moreno then took his case to the U.S. Court of Appeals for the Fifth Circuit.

The Fifth Circuit Upheld the Insurer’s Summary Judgment

In a resounding victory for the insurance company, the appeals court held the insurer was not required to force its way into the case. An insurance company does not take on a duty to defend purely by virtue of being aware of a lawsuit. Specific notice must be provided to the insurance company along with a request to defend. The defendant in the case must forward the lawsuit papers to the insurer and make a request in accordance with the explicit language of the insurance policy.

Without actual knowledge of a lawsuit, an insurance company is not in a position where it can have any input into the defense of a claim or a settlement agreement. In Moreno, the insurance company was simply handed a bill it was expected to pay without any ability to participate in the process. The painting company’s attorney handled the matter on his own. Without the ability to exercise any decisions in the case, the insurance company should not be expected to pay. Notice provisions in these situations serve several purposes. One of them is to allow an insurance company to make decisions about the defense of a claim when it is the one expected to sign the check resolving it.

The fact that the attorney provided a copy of the complaint to the insurance company at its request was nothing more than a professional courtesy. It did not constitute formal notice of the claim, nor did it amount to a request to defend. As such, the insurance company was under no obligation to pay money toward the settlement. The insured determined on their own that the policy did not cover the claim, and their actions were entirely consistent with that understanding.

This Seems to be a Clear Case of Poor Lawyering

Based on the facts of this case as explained in the Fifth Circuit’s decision, this case seems to be a prime example of the painting company’s attorney not being aware of the proper steps. Even though the painting company’s owner did not think the claim was covered by the company’s insurance policy. The first thing the lawyer should have done was request a copy of the insurance policy.

Then, the lawyer should have read the policy more carefully and should not have proceeded on his own without involving the insurance company. When the insurance company attempted to contact the lawyer several times, that lawyer should have known to give the insurance company formal notice of the claim. The lawyer’s professional experience should have led him to know there was a reason why the insurance company kept asking. In this case, the painting company appears not to have received proper advice from their attorney. This is one of the many reasons why it is so important to work with competent insurance defense counsel.