Court Rules Liability Insurer that Breached Its Duty to Defend Cannot “Cure”

A commercial general liability insurer refused to defend its policyholder even though the complaint against the policyholder alleged potentially covered claims.  A year later, after a default judgment was entered against the policyholder, the insurer reconsidered its denial and tried to assume the policyholder’s defense.  A judge in the Western District of Washington ruled that the insurer could not “cure” its breach.  The court also ruled that the insurer acted in bad faith as a matter of law when it used information outside the complaint to deny a defense.