Emhart Industries, Inc. v. Home Insurance
515 F. Supp. 2d 228 | District Court, D. Rhode Island | 2007
What This Case Means for Subcontractors
Emhart Industries sued its insurance carriers for refusing to defend and indemnify costs related to environmental contamination cleanup at a Superfund Site. The court ruled that insurers must defend their policyholders whenever charging documents allege facts that could potentially fall within policy coverage, even if those facts are ambiguous or remote. The insurer bears the burden of proving there is absolutely no potential coverage to avoid the duty to defend. This matters to subcontractors because it means your general liability insurer likely owes you a defense in environmental or pollution claims unless they can definitively prove the policy excludes that type of damage.
Key Takeaways
- •If a lawsuit or claim alleges facts that could possibly be covered by your insurance policy, the insurer must pay for your legal defense—even if coverage is unclear or unlikely.
- •The burden is on the insurance company to prove there is zero chance of coverage; you don't have to prove coverage exists to get a defense.
- •Ambiguous or remote allegations of covered events still trigger the insurer's duty to defend, so don't accept a denial without pushing back.
The insurer must establish the absence of any potential for coverage.
Frequently Asked Question
Can my insurance company refuse to defend me in a lawsuit just because the claim is unclear or might not be covered?
No. If the lawsuit allegations could potentially fall within your policy coverage—even if coverage is ambiguous or remote—your insurer must pay for your defense. The insurance company has to prove there is absolutely no potential for coverage to avoid defending you. This is a strong protection for subcontractors facing environmental or pollution claims.
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