The Insurer's Right to Reimbursement of Defense Costs

63 Pages Posted: 21 Jul 2012

See all articles by Robert H. Jerry

Robert H. Jerry

University of Florida - Levin College of Law

Date Written: January 1, 2000

Abstract

This article examines the theoretical justification for the insurer's asserted right to reimbursement of defense costs incurred in defending noncovered claims. It sketches some details about the duty to defend which are necessary prerequisites to exploring any claim to a right of reimbursement. It discusses the rationale offered by most courts and commentators for recognizing the right to reimbursement: under the law of restitution, the insurer who defends a noncovered claim bestows a benefit on the policyholder which, in justice, ought to be returned. The article offers an alternative justification; it explains that the insurer's right should be analyzed in terms of contract law rules pertaining to interim settlements of unliquidated, disputed claims. This article concludes by briefly addressing a different, but pivotal, question: whether, apart from the issue of the right being grounded in sound legal principles, the existence of such a right is desirable.

Keywords: insurance law, restitution, noncovered claims, defense costs, reimbursement of defense costs, Buss v. Superior Court, defense within limits policies, self-consuming policies, burning limits policies

JEL Classification: K00, K39

Suggested Citation

Jerry, Robert H., The Insurer's Right to Reimbursement of Defense Costs (January 1, 2000). Arizona Law Review, Vol. 42, 2000, Available at SSRN: https://ssrn.com/abstract=2113090

Robert H. Jerry (Contact Author)

University of Florida - Levin College of Law ( email )

P.O. Box 117625
Gainesville, FL 32611-7625
United States
352 273 0603 (Phone)
352 392 8727 (Fax)

HOME PAGE: http://www.law.ufl.edu

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