La Rotunda v. Royal Globe Insurance Co.

After an automobile accident near her land, the insured was sued. The insurer received notice of the suit, made its investigation, and refused to defend, taking the position that the policy did not cover the accident. The insurer also refused to settle the case on the insured’s behalf. The insured was represented at trial by her own lawyer and lost.

The assigns of the insured now sue the insurer, claiming that it is estopped from denying coverage because it failed to defend the case under a reservation of rights or seek a declaratory judgment that there was no coverage. They also seek to go to…