Opinion ID: 1169781
Heading Depth: 3
Heading Rank: 1

Heading: Duty to Defend Where There Are Two or More Co-Insurers

Text: Whether an insurer can compel contribution from a coinsurer who is equally obligated to defend is a question that has resulted in a split of authority. Some jurisdictions have held that because the duty to defend is personal to each insurer, the obligation is several and where many carriers are obligated to defend, each separate carrier is neither entitled to divide the duty nor require contribution from another absent a specific contractual right. United States Fidelity & Guar. Co. v. Tri-State Ins. Co., 285 F.2d 579, 582 (10th Cir.1960). However, the trend in other jurisdictions has been to allow an insurer, under the doctrines of contribution or equitable subrogation, to recover costs of defense from other insurers who were equally obligated to defend yet failed to do so. See National Indem. Co. v. St. Paul Ins. Cos., 150 Ariz. 458, 724 P.2d 544, 545 (1986) (Under the principle of equitable subrogation, the insurer which has performed the duty to provide a defense to its insured should be able to compel contribution for a share of the cost of defense from another insurer who had a similar obligation to the same insured but failed to perform it.). The Arizona court reasoned that an insurer should not be encouraged to avoid its responsibility to provide a defense for its insured, nor should that insurer be rewarded for breaching its duty under its insurance contract. Id. In responding to the Tenth Circuit's approach, one scholar comments: These holdings are indefensible. The courts are ignoring realities and encouraging insurers who are not concerned with their obligations to their insured in the hope that someone else will step into the breach.... Further, as a matter of public policy, courts should be demanding that insurers give prompt defense of claims to policyholders rather than to tolerate the shifting of responsibility with such impunity. 7c John Allan Appleman, Insurance Law and Practice § 4691, at 278 (Walter F. Berdal ed., 1979). See also Continental Cas. Co. v. Zurich Ins. Co., 57 Cal.2d 27, 17 Cal.Rptr. 12, 366 P.2d 455, 461 (1961). [12] We agree with those jurisdictions that have allowed contribution where one insurer has paid more than its fair share of the defense costs. Where it can be shown that a co-insurer failed to defend or failed to pay its share of the defense expenses, that insurer should not be rewarded and payment excused when another co-insurer has taken upon itself the provision of that defense. Holding otherwise would not only lead to an inequitable result but may also conflict with our stated policy of encouraging prompt payments to the insured, leaving disputes concerning coverage to be determined later. See State Farm, 912 P.2d at 987. We thus conclude that Aetna does have a claim for equitable subrogation to compel Hartford to contribute its fair share of the defense expenditures. [13]