To Defend or Not Defend? Issues Surrounding the Decision of the Insurer to Defend the Insured
Summary: This case came before the federal court for the District of South Carolina upon motions to dismiss filed by Church Insurance Company of Vermont (CIC-VT) and The Church Insurance Company (CIC), and The Episcopal Church in South Carolina’s (TEC-SC) motion for summary judgment. CIC-VT issued an insurance policy (“Policy”) to TEC-SC. The Policy provided commercial liability coverage and other coverage, which specifically provided coverage for “advertising injury liability.” After the underlying action was commenced against TEC-SC, it requested that CIC-VT defend and indemnify it. However, CIC-VT denied coverage on numerous grounds, including that the claims in the underlying action were not covered by the Policy. TEC-SC then filed suit in federal court against CIC-VT and CIC, alleging claims for: (1) breach of contract; (2) insurance bad faith; and (3) declaratory judgment that Defendants have a duty to defend and indemnify TEC-SC in the underlying action.