This article examines the theoretical justification for the insurer's asserted right to reimbursement of defense costs incurred in defending noncovered claims. It sketches some details about the duty to defend which are necessary prerequisites to exploring any claim to a right of reimbursement. It discusses the rationale offered by most courts and commentators for recognizing the right to reimbursement: under the law of restitution, the insurer who defends a noncovered claim bestows a benefit on the policyholder which, in justice, ought to be returned. The article offers an alternative justification; it explains that the insurer's right should be analyzed in terms of contract law rules pertaining to interim settlements of unliquidated, disputed claims. This article concludes by briefly addressing a different, but pivotal, question: whether, apart from the issue of the right being grounded in sound legal principles, the existence of such a right is desirable.
The Insurer's Right to Reimbursement of Defense CostsUF Law Faculty Publications
Citation InformationRobert H. Jerry, II, The Insurer's Right to Reimbursement of Defense Costs, 42 Ariz. L. Rev. 13 (2000), available at http://scholarship.law.ufl.edu/facultypub/134