Cay Divers, Inc. v. Raven

OPINION OF THE COURT

ROSENN, Circuit Judge.

This appeal presents the dilemma faced by an insured party advised to settle a claim by counsel provided by but not acting in behalf of the liability insurer, who reserves the right to contest coverage. Although the district court declared that there was no coverage for two of the three counts of the underlying action against the insured, because there was a slim possibility of coverage for the third count, the court directed the insurer to defend its insured. The carrier provided counsel under a reservation of rights to contest coverage. When the…