'K2' and Consequences of Insurers' Breach of Duty to Defend

, New York Law Journal


In their Corporate Insurance Law column, Howard B. Epstein and Theodore A. Keyes write: The recent decision in 'K2-II' does not alter the landmark Court of Appeals' decision issued in 'Isadore Rosen & Sons.' The K2-II decision makes clear that in the absence of a covered loss, the insurer simply has no duty to indemnify. In contrast, under Isadore Rosen, an insurer that breaches the duty to defend a claim for loss that is covered under the policy will be held liable for the insured's reasonable settlement of that claim—regardless of whether the insurer consented to such settlement.

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