February 25th, 2019
Picking up the tab: who is responsible for the defense under policies with a deductible or self-insured retention?
By, Laura F. Locklair, Esq.
Insurers often rely on deductible and/or self-insured retention (“SIR”) endorsements to shift the burden to pay for a portion of the defense to the insured. However, absent specific policy language, such endorsements do not operate to excuse or delay an insurer’s duty to defend. Moreover, although the terms are often used interchangeably, important distinctions exist between deductibles and SIRs that impact when an insurer is obligated to defend.
“A deductible or self-insured retention states the monetary threshold of the insurer’s obligation to pay liabilities covered by the policy.” Insurance Coverage of Construction Disputes, Deductibles and Self-Insured Retentions (2d ed.). “Deductibles represent the portion of a covered loss that the policyholder may eventually be obligated to reimburse the insurer.” §1:43 Practical Tools for Handling Insurance Cases, Deductibles and Self-Insured Retentions (June 2018 Update). Whereas a deductible represents a portion of a covered loss lying within the terms of the policy for which the policyholder may be obligated to reimburse the insurer, a SIR is an initial portion of a loss that lies outside the policy. Legacy Vulcan Corp. v. Superior Court, 185 Cal.App.4th677, 694 (2010) (“A ‘self-insured retention,’ or ‘retained limit,’ generally refers to the amount of a loss or liability that the insured agrees to bear before coverage can arise under the policy.”). Unlike an SIR, wherein the amount of the retention is not included in and the limits of the policy stack on top of the SIR amount, “[w]ith a deductible, the amount of the deductible is included in the amount of the policy limits.” §4:6 Insurance Coverage of Construction Disputes, Deductibles and Self-Insured Retentions (2d ed.). Because “the insurer has no responsibility to pay claims until [the SIR] is exhausted,” some jurisdictions have indicated that a SIR typically “must be divulged” on a certificate of insurance or declarations page Id.
When a deductible is involved, an insurer owes an immediate obligation to defend claims that are subject to the deductible. §1:43 Practical Tools for Handling Insurance Cases, Deductibles and Self-Insured Retentions (June 2018 Update). Payment of a deductible is not a precondition to the duty to defend, even if the insured may ultimately be required to reimburse the insurer for some portion of the costs of the defense that the insurer was required to provide. See e.g American Safety Cas. Ins. Co. v. City of Waukegan, Ill. 678 F.3d 475, 482 (7th Cir. 2012) (rejecting insurer’s arguments that “an insurer’s duty to defend begins only after the insured’s [defense] expenses exceed the deductible.”); Continental Cas. Co. v. National Union Fire Ins. Co. of Pittsburg, PA, 940 F.Supp.2d 898 (D. Minn. 2013) (“Simply because [the insurer] will ultimately be reimbursed for certain costs it expends in defending [the insured] does not indicate that [the insurer] does not have a duty to defend [the insured].”); Century Indemn. Co. v. Marine Group, LLC, 2012 WL 6016953 at *2 (“[I]n the case of a deductible, the insured must pay a portion of the loss but is not obligated to exhaust the deductible before a defense is provided.”) aff’d on reh’g Century Indemn. Co. v. Marine Group, LLC, 848 F.Supp.2d 1238, 1250 (D. Or. 2012) (“The duty to defend does not depend on the ultimate amount expended in defense of a claim…[to do so] would nullify the policy language that establishes a duty to defend in the first place.”).
Conversely, a SIR may operate to excuse an insurer’s obligation to defend a policy holder until the retention has been satisfied but only if the language is sufficiently “conspicuous, plain and clear.” Legacy Vulcan Corp., 185 Cal.App.4th at 697 (holding that in order for a SIR provision in a policy providing primary liability coverage to relieve the insurer of the duty to provide an immediate “first dollar” defense, the policy must expressly so provide). Specifically, some courts have found that the “conspicuous, plain and clear” language required for a policy with a self-insured retention to exclude an insurer’s otherwise immediate duty to defend must expressly reference the abrogation of the defense obligation. Id. (insurer had duty to defend despite insured’s failure to exhaust retained limit where policy “did not state that the duty to defend was limited by the retained limit in any manner”); see also Axis Surplus Ins. Co. v. Glencoe Ins. Ltd., 204 Cal.App.4th 1214, 139 Cal.Rptr. 578, 583 (2012) (“[T]he policy stated [the insurer] had no duty to investigate or defend any claim until [the insured] satisfied the [self-insured retention]”; State Nat’l Ins. Co. v. Cnty. Of Camden, Civ. No. 08-1528, 2012 WL 6652819, at *1 (D.N.J. Dec. 19, 2012 (self-insured retention endorsement expressly stated that the insured “shall be obligated to provide an adequate defense and investigation of any action for or notice of any actual, potential or alleged damages”).
Despite the difference noted above, often the terms “deductible” and “SIR” are used interchangeably. In acknowledgment of the confusion, courts have recognized “these terms alone are not sufficient to convey to an unsophisticated insured an understanding of what an insurance expert or attorney might believe to be the essence of a self-insured retention” and, as a result, “[a]ny limitation on coverage otherwise available under the policy “must be stated precisely and understandably, in words that are part of the working vocabulary of the average layperson.” Legacy Vulcan Corp., 185 Cal.App.4th at 694.
The Beaufort County Court of Common Pleas in South Carolina recently had an opportunity to consider the differences between a deductible and an SIR and the impact on an insurer’s duty to defend in Centex Homes, a Nevada General Partnership v. Raymond and Denise Gibbo, et al., C.A. No. 2016-CP-07-02287 (Dec. 17, 2018). In that case, the insurer suggested that a “deductible endorsement” on the policy excused its obligation to defend an additional insured in several underlying construction defect actions because the defense fees and costs of the additional insured in those underlying actions did not (and would not, given that the underlying actions had resolved) exceed the deductible amount. While the deductible endorsement specified a deductible amount that was inclusive of damages and supplementary payments and the deductible endorsement also stated:
4. Other Rights and Duties (Ours and Yours)
All other terms of this policy, including those with govern (a) our right and duty to defend any claim, proceeding or suit against you, and (b) your duties if injury occurs, apply irrespective of application of this deductible endorsement.
The trial court determined that “the ‘unambiguous, clear and explicit’ terms of the Deductible Endorsement provide that [the insurer’s] duty to defend’ applies “irrespective of the deductible.” See Gibbo. The South Carolina trial court’s holding was consistent with other courts across the country interpreting the same language in similar endorsements. See e.g., Continental Cas., 940 F.Supp.2d at 922. (determining that “the Deductible Endorsements do not disclaim or alter [the insurer’s] duty to defend” and instead “expressly reaffirm that [the insurer] has a duty to defend.”). Because it determined that the insurer’s duty to defend the additional insured “was not altered or excused” by the deductible endorsement, the Gibbo court concluded that the insurer breached its duty to defend and awarded the additional insured all of the defense fees and costs it incurred in the underlying action as well as the fees and costs it expended in a declaratory judgment seeking to force the insurer to honor its duty to defend.
Even if the named insured is responsible for reimbursing the insurer for the amount of defense fees and costs that fall within the limits of a deductible, courts have concluded that the insurer retains the duty to defend because “the duty to defend is distinct from a mere obligation to pay for defense costs.” Continental Cas., 940 F.Supp.2d at 918 (“Simply because [an insurer] will ultimately be reimbursed for certain costs it expends in defending [an insured] does not indicate that [the insurer] does not have a duty to defend [the insured].”). The duty to defend is more than the mere payment of money, instead it “encompasses hiring attorneys and managing lawsuits,” developing litigation strategy, and evaluating and securing settlements and judicial dispositions. Id. As a result, an insurer’s attempt to transfer its duty to pay for defense fees and costs through a deductible or SIR may not ultimately be successful in transferring or extinguishing its duty to defend.
December 20th, 2018
Hold On to Your Sombreros: the Fourth District Court of Appeals in California Reiterates that Loss of Use Constitutes “Property Damage”
By, Kathrine L. Sloan, Esq.
The recent decision in Mid-Continent Cas. Co. v Adams Homes of Northwest Florida, Inc., No. 17-12660, 2018 WL 834896 (11 Cir. Feb. 13, 2018) determined that loss of use claims—even where no physical damage to tangible property occurs—are potentially covered claims under CGL policies in Florida. Following in lockstep with the state of Florida, the Fourth District Court of Appeals in California held last month in Thee Sombrero, Inc. v. Scottsdale Ins. Co., 28 Cal. App. 5th 729, 239 Cal. Rptr. 3d 416 (Ct. App. 2018), that loss of use of a property in a particular capacity—even where the property is still currently in use by the insured in a different form—constitutes “property damage” for purposes of a CGL policy.
Thee Sombrero, Inc. (“Sombrero”) owned commercial property and, pursuant to a conditional use permit, permitted Sombrero’s lessees to operate the property as a nightclub called El Sombrero. Id. at 418-19. A company called Crime Enforcement Services (“CES”) provided security at the nightclub. Id. CES held a CGL policy of insurance issued by Scottsdale Insurance Company (“Scottsdale”) that provided coverage for “property damage” caused by an “occurrence”. Id. at 419. The CGL policy issued by Scottsdale defined “property damage” as either (a) “[p]hysical injury to tangible property, including all resulting loss of use of that property,” or (b) “[l]oss of use of tangible property that is not physically injured.” Id.
After a fatal shooting occurred on the property in 2007, the conditional use permit was revoked and replaced with a modified conditional use permit that only allowed the space to operate as a banquet hall. Id. Sombrero then filed an action against CES resulting in a default judgment for negligence and breach of contract. Id.
Subsequently, Sombrero filed the instant action against Scottsdale alleging that the loss of Sombrero’s ability to use the property as a nightclub constituted property damage within the meaning defined in the CGL policy issued by Scottsdale. Specifically, Sombrero presented evidence that the value of the property decreased from $2,769,231.00 to $1,846,153.00 because the property could no longer operate as a nightclub, and that this loss of value qualified as “property damage” for purposes of coverage. Id. The trial court disagreed finding that the claim against CES was for a pure economic loss and did not constitute “property damage” for purposes of the policy issued by Scottsdale. Id. at 420.
The California Court of Appeals reversed the decision of the trial court holding that “it defies common sense” to argue that the loss of the ability to use the property as a nightclub failed to qualify as loss of use that in turn constituted “property damage” under the policy. Id. at 421. The Court acknowledged contrary authority in Washington (Scottsdale Ins. Co. v. International Protective Agency, Inc., (2001) 105 Wash.App.244 [19 P.3d 1058](IPA)) with similar facts to the instant case, but found that the loss of a liquor license was not the same as the loss of use of the property in its original capacity. Sombrero, 239 Cal. Rptr. 3d at 422. Specifically, the Court found that a loss of the ability to serve liquor on the property was not tangible property, but rather was the loss of an entitlement. Id. Therefore, any loss of use of the liquor license was not loss of use of tangible property that would qualify as “property damage” for purposes of coverage. Id.
The Court refuted Scottsdale’s claim that “a right to occupy property is not a tangible property interest” finding that a lease is a conveyance of an estate in real property pursuant to California law and that because “[a] building is tangible [and] [d] irt is tangible.. .a lessee in possession has a tangible property interest in the leased premises.” Id. at 423. Notably, the Court emphasized that the complaint alleged that the loss of the permit right resulted in the loss of use of the property as a nightclub, which in turn reduced the economic value of the property. In stating the “correct principal,” the Court determined that “losses that are exclusively economic, without any accompanying physical damage or loss of use of tangible property, do not constitute property damage.”
The Sombrero decision widens the definition of “property damage” and thereby expands coverage under a CGL policy. Although this case did not arise out of a construction defect dispute, the points of insurance coverage could conceivably be applicable in future construction defect claims. Of course, the language of each CGL policy is controlling, which is why it is important to engage coverage counsel in the evaluation of these matters.
November 16th, 2018
By, Alex Brockmeyer, Esq.,
Most insurance policies have some sort of provision that addresses what happens when an insured misrepresents or attempts to defraud an insurer. This provision, otherwise known as a “fraud provision” or “forfeiture provision” varies in effect depending on its breadth. In Flores v. Allstate Ins. Co., 819 So. 2d 740 (Fla. 2002), the Florida Supreme Court identified three types of fraud/forfeiture provisions:
- those that state any misrepresentation will void the entire policy or policy;
- those that state that any misrepresentation as to a particular coverage voids coverage under that part; and
- those that neither reference the “entire policy” nor “this coverage part.”
Id. at 748. Things become interesting when an insurance policy does not contain language that falls within either the first or second category. When a fraud/forfeiture provision does not clearly void the entire policy or a particular coverage, insurers may still attempt to prove fraud or misrepresentation to void the entire policy. In such circumstances, Flores directs courts to use Florida’s well-established rules of insurance policy interpretation. Id. at 750.
Insurers retain control over the scope of their coverage and can alter policy language when desired. To that end, insurers must incorporate unambiguous language into its policy. See Berkshire Life Ins. Co. v. Adelberg, 698 So. 2d 828, 830 (Fla. 1997). Ambiguity exists whenever terms of the policy are subject to different reasonable interpretations, one that provides coverage and one that does not, or where more than one interpretation of a policy provision fairly exists. Weldon v. All Am. Life Ins. Co., 605 So. 2d 911, 915 (Fla. 2d DCA 1992). Where ambiguity exists, Florida law requires courts adopt the interpretation affording coverage. Westmoreland v. Lumbermens Mut. Cas. Co., 704 So. 2d 176, 179 (Fla. 4th DCA 1997). Florida uses this standard because an insured is “entitled to a clear explanation of terms rather than a fine distinction which was never written into his contract for insurance coverage.” Adelberg, 698 So. 2d at 830.
Applying these principles, Flores held a fraud/forfeiture provision that does not fall into either the first or second categories, must be interpreted as only effecting the specific portion of the claim connected to the misrepresentation or fraud. Flores, 819 So. 2d at 750. For example then, a misrepresentation in connection with a PIP claim does not preclude the insured from recovering under the uninsured/underinsured portion of his policy. Id. In the homeowners’ insurance policy context, other courts have reached similar conclusions. For example, in Tempelis v. Aetna Cas. & Surety Co., 485 N.W. 2d 217 (Wis. 1992), the Wisconsin Supreme Court held that an insured was entitled to recover under the dwelling and contents portions of the insurance policy even though a misrepresentation occurred in connection with the insured’s additional living expenses. Id. at 222.
In conclusion, policy language matters and insureds, insurers, and courts alike should be mindful of policy language when a fraud/forfeiture provision is at issue.
November 12th, 2018
By, Austin Bersinger, Esq.
Moore v. Home Depot USA, Inc., No. CV 16-00810-BAJ-RLB, 2018 WL 4976811, at *1 (M.D. La. Oct. 15, 2018)
A Louisiana federal court recently rejected an insurer’s attempt to escape providing defense and indemnity to an additional insured. In Moore v. Home Depot USA, Inc., the Court expressly rejected an insurer’s argument that a blanket AI endorsement only provided coverage for vicarious liability.
This lawsuit arose when Steven Moore was electrocuted while involved in a project to install rooftop air-conditioning units at a Home Depot store. Mr. Moore was electrocuted by a power line as he unloaded air-conditioning supplies for Commercial Coolants, Inc. (“Commercial Coolants”). After the injury, Mr. Moore and his wife sued Home Depot, Entergy, Commercial Coolants and others involved in the project. Plaintiffs also brought a direct-action claim against Commercial Coolants’ insurer, Depositors Insurance Company (“Depositors”). Depositors answered the Amended Complaint and crossclaimed against Home Depot. In response, Home Depot counterclaimed against Depositors for penalties, damages, attorneys’ fees, and a declaration that Depositors owes it defense and indemnity.
On summary judgment, Depositors asked the Court, among other things, to declare that Depositors need not defend or indemnify Home Depot as an additional insured under the commercial general liability policy Depositors issued to Commercial Coolants. The blanket additional-insured endorsement at issue provided:
B. The insurance provided to the additional insured is further limited as follows:
1. That person or organization is an additional insured, but only with respect to liability for
“bodily injury” or “property damage” caused, in whole or in part, by “your work” for the additional insured which is the subject of the written contract or written agreement.
Depositors asked the Court to enter summary judgment in its favor because its additional-insured endorsement did not cover the claims against Home Depot because Depositor’s blanket additional-insured endorsement limited coverage to Home Depot’s vicarious liability for Commercial Coolants’ fault. Depositor’s argument boiled down to because Home Depot cannot have vicarious liability for Commercial Coolants’ fault, its blanket additional-insured endorsement did not cover the claims against Home Depot.
The Court rejected Depositors’ argument for two reasons. First, Depositors’ interpretation required the Court to read into the policy a limit on coverage that is not in the policy’s text. The Court held that “[n]othing in the text of the blanket additional-insured endorsement limits coverage to Home Depot’s vicarious liability for Commercial Coolants’ fault. If Depositors intended to limit coverage to vicarious liability, it could have used language reflecting that intent. See McIntosh v. Scottsdale Ins. Co., 992 F.2d 251, 255 (10th Cir. 1993).”
Second, the Court held that Depositors’ interpretation misconstrued the “caused, in whole or in part, by” language in the endorsement. The Court held that the endorsement language clashed with an interpretation that equates “liability” with “vicarious liability” because vicarious liability is an all or nothing proposition. Simply put, the Court stated that Home Depot cannot have partial vicarious liability for Commercial Coolants’ work. However, the Court did give guidance. The Court stated that the “better reading of the blanket additional-insured endorsement is that it extends additional-insured coverage to Home Depot for Home Depot’s alleged liability for “bodily injury” or “property damage” caused, in part, by Commercial Coolants’ work for Home Depot under the MSA.” In rejecting the insurer’s “cramped” interpretation of the additional-insured endorsement, the Court communicates an all important lesson in insurance coverage. If the insurance contract doesn’t say it, courts will not strain to add conditions under which insurers can arbitrarily avoid coverage.
1 As background, Home Depot and Commercial Coolants entered into a Maintenance Services Agreement (“MSA”). The MSA contained an indemnification provision as well as a provision that required Commercial Coolants to obtain insurance naming Home Depot as an additional insured.
October 5th, 2018
By, Laura Locklair, Esq.
Though the saying goes “better late than never,” the Court’s opinion in Episcopal Church in South Carolina v. Church Insurance Company of Vermont, 53 F.Supp.3d 816 (D.S.C. 2014) suggest that an insurer’s failure to timely acknowledge its defense obligations to its insured, even when the insurer later agrees to participate in the insured’s defense, can still result in stiff penalties, not all of which are monetary.
The insured church, which was also the plaintiff in Episcopal Church in S.C. (the “Insured”), was sued by another church on March 5, 2013 concerning disputes regarding the ownership of certain real, personal and intellectual property (the “Underlying Action”). Episcopal Church in S.C., 53 F.Supp.3d at 819. The Insured tendered its defense in the Underlying Action to its insurer in August of 2013, and the insurer denied the defense on August 29, 2013. Id. at 819-820. On February 28, 2014, and only after the Insured was forced to file a declaratory judgment action and successfully persuaded the Court to find on summary judgment that the insurer owed a duty to defend, the insurer issued a reservation of rights letter agreeing to participate in the Insured’s defense in the Underlying Action. Id. At 820. However, in its reservation of rights correspondence, the insurer alleged that it was entitled to replace the Insured’s attorney who had represented the insured for over a year in the Underlying Action with new counsel of the insurer’s choosing. Id. When called upon to predict whether the South Carolina Supreme Court would find that an insurer retains the right to control the defense after it refused to defend in breach of the insurance contract , the Court in Episcopal Church in S.C. concluded that the insurer’s wrongful refusal to defend the Insured in the Underlying Action forfeited the insurer’s right to control the defense of the Insured, even after the Insurer later reversed its position and acknowledged its defense obligations. Id.
In reaching its determination, the Court first acknowledged that South Carolina courts have found that where a policy provides an insurer with the right and duty to defend, the insurer has “the right and the duty to control the defense until such time as it [i]s determined that it ha[s] no liability insurance coverage.” Id. at 823, citing Allstate Ins. Co. v. Wilson, 259 S.C. 586, 193 S.E.2d 527, 530. That right to control the defense, the Court suggested “includes the right to control the defense and select defense counsel.” Episcopal Church in S.C., 53 F. Supp.3d at 823.
However, the insurer’s right to control the defense and appoint counsel is not without limit. In this instance, the Court concluded that the insurer “lost its right to control the defense and select defense counsel when it breached its duty to defend.” Episcopal Church, 53 F.Supp.3d at 826. The Court’s opinion is in line with and relied on both treatises on insurance law and decisions from other courts. Id. at 824-825. Namely, compendiums reviewed by the Court universally agreed that an unjustified refusal by an insurer to defend an insured results in the insurer’s loss of the ability to control the defense and select defense counsel. See, e.g., 49 A.L.R.2d 694 at § 18; 1 Insurance Claims & Disputes § 4:38; 3-17 New Appleman on Insurance law Library Ed. § 17.07. Likewise, courts around the country have opined that an insurer’s refusal to defend forfeits any right to control the defense, including selection of counsel. See, e.g., BellSouth Telecomms., Inc. v .Church & Tower of Fla., Inc., 930 So.2d 668 (Fla.Dist.Ct.App.2006); Eigner v. Worthington, 57 Cal.App.4th 188, 66 Cal.Rptr.2d 808 (1997), Royal Ins. Co. of Am. V. Kirksville Coll. Of Osteopathic Med., Inc., 304 F.3d 804 (8th Cir.2002); Wells’ Dairy, Inc. v. Travelers Indem. Co. of Ill., 266 F.Supp.2d 964 (N.D. Iowa 2003), Sentinel Ins. Co., Ltd. v. First Ins. Co. of Haw., Ltd., 76 Hawai’i 277, 875 P.2d 894, on reconsideration sub nom. Sentinel Ins. Co., Ltd. v. First Ins. Co. of Haw., Ltd., 76 Hawai’i 453, 879 P.2d558 (1994); Grube v. Daun, 173 Wis.2d 30, 496 N. W.2d 106 (Wis.Ct.App.1992).
Moreover, the Court was not persuaded that the insurer’s later about face and belated acceptance of the defense was sufficient to cure the breach or permitted the insurer to control the Insured’s defense. To that point and as additional support for its decision that the insurer’s breach forfeited its right to participate in the defense, the court focused on the fact that the Insured, which had been forced to retain and pay its own attorney in the Underlying Action for over a year, would “suffer material harm if forced to relinquish control of its defense.” Episcopal Church in S.C., 53 F.Supp.3d at 826.
As a result of the insurer’s unjustified refusal to defend the Insured, the Court determined that the insurer was not only precluded from appointing defense counsel of its choosing, it was also required to reimburse the Insured for the reasonable costs of defense of the Underlying Action, including costs incurred pretender. Episcopal Church in S.C., 53 F.Supp.3d at 830.
Insurers in South Carolina and beyond should be cautioned that their failure to get it right the first time by assuming the timely demanded defense of an insured can have significant consequences, including forfeiting the right to select counsel, loss of the ability to control defense strategy, and the responsibility for shouldering the entirety of the insured’s reasonable defense costs, including those fees and costs incurred pretender.
1 Because the Court’s jurisdiction was based on diversity, the Court looked to South Carolina law to evaluate the rights and responsibilities of the Insured and insurer. Episcopal Church in S.C., 53 F.Supp.3d at 821. However, because the South Carolina Supreme Court had not addressed the particular issue before the Court, the Court required to predict how that the South Carolina Supreme Court would rule if presented with the issue. Twin City Fire Ins. Co. v. Ben Arnold-Sunbelt Beverage Co. of S.C., 433 F.3d 365, 369 (4th Cir. 2005).
2 For example, Florida insurers are statutorily required to retain “independent counsel which is mutually agreeable to the parties.” FLA. STAT. § 627.426. To be mutually agreeable, the insured must actually approve the selected counsel. See Cont’l Ins. Co. v. City of Miami Beach, 521 So. 2d 232, 233 (Fla. App. 3d Dist. 1988); Am. Empire Surplus Lines Ins. Co. v. Gold Coast Elevator, Inc., 701 So. 2d 904, 906 (Fla. App. 4th Dist. 1997).
3 Though not an issue before the Court in Episcopal Church of S.C., courts have found that an insurer’s unjustified refusal to defend also waives its right to be involved in defense strategy, reject settlements, and receive notice of developments in the underlying action. See, e.g., Orleans Vill. V. Union Mut. Fire Ins. Co., 133 Vt. 217, 335 A.2d 315, 318 (1975) (“[A]n insurer who refuses to defend after timely demand is made upon it to do so cannot control the defense or expect advance notice of the refused party’s trial strategy.”); Royal Ins. Co. of Am. V. Kirksville Coll. of Osteopathic Med., Inc., 304 F.3d 804 (8th Cir. 2002) (“When an insurance company refuses to defend its insured, the insurer loses its right to control the litigation and to reject what it considers an unfavorable settlement.”); 14 Couch on Insurance 3d § 202:7 (explaining that “where insurer breaches its contract by refusing to defend…the insurer…cannot object to the insured’s handling of the case .. is not entitled to notice of the insurer’s trial strategy, and has no right to notice of pleadings filed in the underlying action.”).