Court Says Insurer’s Refusal to Defend Suits Doesn’t Waive Right to Challenge Settlements

An insurer did not forfeit the right to challenge a policyholder’s settlements even if it refused to defend environmental claims and enforcement actions, the U.S. District Court for the District of Kansas has ruled (Coffeyville Resources Refining & Marketing LLC v. Illinois Union Insurance Co., D.Kan., No. 08-1204).

If the court were to find that the insurer did refuse to defend the underlying action—a finding that the insurer disputes, and the court did not reach—it would only be bound by those settlements if they were “reasonable,” the court said in its Oct. 25 decision.

During a July ...