When the underlying lawsuit alleges facts that may be covered under the insurance policy, the insurer has a duty to defend and provide coverage even if the suit is groundless or fraudulent
The trial court held that Farmers Automobile Insurance (Farmers) had a duty to defend Michael Danner and Tracy Watson (the defendants) in an insurance coverage lawsuit filed by David Winkler.
Farmers appealed the trial court decision finding a duty to defend the defendants. The underlying action between the defendants and Winkler alleges that the defendants committed battery against Winkler. Farmers claimed they had no duty to defend because the alleged facts in the lawsuit were not covered under the policy and that the policy only covered accidental occurrences, not intentional acts. The defendants argued that the provision excluding intentional acts did not apply because the defendants claimed self defense. However, the court found the argument was without merit. The trial court held that even though the acts by the defendants were intentional, Farmers still had a duty to defend because the provision in the policy stated that Farmers would provide defense even if the suit was groundless or fraudulent.
On de novo review, the appellate court considered the underlying lawsuit allegations in relation to what was specifically covered in the defendants’ insurance policies. In reading the policy as a whole and considering the intent of the policy, the appellate court found that the duty to defend results when an otherwise covered claim is groundless or fraudulent.
Specifically, the appellate court stated that the circuit court’s interpretation of the language in the policy “provide a defense at our expense by counsel of our choice, even if the suit is groundless, false, or fraudulent” to mean that Farmers had a duty to defend any claims, regardless of whether it was a suit brought against an insured for bodily injury caused by an occurrence to which the coverage applied, to be in error.
There is no duty to defend if the alleged facts do not fall under the coverage of the insurance policy, in this case, if the facts plead a specifically excluded occurrence. The court reversed the trial court decision, finding that Farmers had no duty to defend Danner and Watson. The matter was remanded back to the trial court for determination on whether the policy contained a provision allowing for an exception for self defense.
