 |
 |
to fill out a simple form to connect to Personal Injury Lawyers in your area.
|
|
|
|
|
Home Insurance Co. v. National Union Fire Insurance of Pittsburgh2/20/2003
>
Once notice is given, even without an express request for a defense, it should be the responsibility of the insurer to contact the insured to determine whether the insurer's assistance in the suit is required. The burden we are placing on the insurer with this rule is not onerous, as the Illinois and Wisconsin courts have noted. Cincinnati Cos., 701 N.E.2d at 505; Towne Realty, 548 N.W.2d at 67. When notified of the insured's potential liability under the suit, the insurer "can simply ask the insured if the insurer's involvement is desired, thus eliminating any uncertainty on the question." Cincinnati Cos. at 504. While in SCSC Corporation, 536 N.W.2d at 316-17, we wanted to make sure that insurers could not be saddled with defense costs over which they had no control, this is not a concern here. The "notice and opportunity to defend" rule we adopt ensures insurers will not be surprised when defense costs are foisted on them.
We hold that once an insured provides its primary or umbrella insurer with notice of a suit and opportunity to defend, it has tendered the defense as required by SCSC Corporation. On the record before us, therefore, we conclude that Cargill legally tendered its defense to National Union as required by Insuring Agreement II.
V.
Home seeks to enforce the provisions of Cargill's defense cost endorsement with National Union in which National Union agrees to repay the primary insurer for defense costs exceeding $750,000 as long as the insured notifies National Union that costs are approaching that level and obtains consent. Application of the endorsement would greatly benefit Home: the defense costs in the suit exceeded two million dollars, entitling Home to recover over one million. Under the contract, the insured is obligated to communicate with National Union as follows:
The company shall indemnify the particular underlying insurer(s) of the Insured on a per occurrence basis for all costs of defending the Insured in excess of $750,000.
The Insured shall notify the company when it is reasonably apparent to the Insured that "defense costs" will reach $750,000 and shall obtain the written consent of the company before incurring additional fees, costs or expenses, such consent not to be unreasonably withheld.
With regard to an occurrence, failure of the Insured to obtain the written consent of the company set forth above, shall render this endorsement without effect as to that occurrence.
The district court determined that Cargill's failure to notify National Union that defense costs had reached $750,000 resulted in complete forfeiture of Home's indemnification rights. The court of appeals did not reach the notice issue, concluding instead that "National Union breached its insurance contract prior to implication of the notice requirement." Home Ins., 643 N.W.2d at 325. The court of appeals held that because National Union breached the insurance contract by not defending Cargill in the Life Point action, and the breach occurred prior to implication of the notice requirement, Cargill was excused from providing notice under the contract.
We agree that National Union's failure to defend Cargill in the Life Point action breached its insurance contract. See Domtar, Inc. v. Niagara Fire Ins. Co., 563 N.W.2d 724, 740 (Minn. 1997) (treating the insurer's failure to defend as a breach of contract). And because we agree that National Union's breach suspended performance under the contract by Cargill, Cargill's failure to provide notice that defense costs were reaching $750,000 is excused. See Space Center, Inc. v. 451 Corp., 298 N.W.2d 443, 451 (Minn. 1980) (noting that "a repudiating party cann
Page 1 2 3 4 5 6 7 8 9 10 11 Minnesota Personal Injury Attorneys
Personal Injury Lawyers
|
| |
to fill out a simple form to connect to Personal Injury Lawyers in your area.
|
|