Those Certain Underwriters at Lloyd's v. Professional Underwriters Agency, Inc.

The lone issue presented in this appeal is whether an insurer that has a pending claim for rescission of an insurance contract must initially provide to the insured a defense in an underlying action, during the pendency of the rescission action. Under the circumstances presented here, we hold that an insurer’s obligation to act on its duty to defend is delayed until the conclusion of the rescission action. If the insurer eventually loses in the rescission action, it will be liable for the cost of the defense, both during and after the rescission action, to the extent dictated by the governing…