Court Rules Insurer that Waited To Take Coverage Position Until After Being Sued Acted in Bad Faith, Cannot “Cure”

A liability insurer failed to take a coverage position for over a year after its policyholder requested a defense. Two weeks after being sued, the insurer offered to defend, then argued its belated offer “cured” any breach of its duty to defend. On summary judgment, a Western District of Washington judge ruled that the insurer breached its duty to defend, and that its delay was “frivolous and unfounded”—and therefore constituted bad faith. Harper│Hayes attorneys recently secured a similar order regarding a liability insurer’s inability to “cure” a prior breach by offering a belated defense.