You're a claims manager for an insurance company. An insured isbeing sued and has tendered its defense under its liabilityinsurance policy with you. The issues in the complaint broughtagainst your insured are complicated. Based on the facts of thecomplaint, it is not immediately clear whether the allegations arecovered by the policy.

In fact, there's a good chance it won't be clear, even afterconsiderable factual investigation occurs. As a claims manager, howdo you meet your duties to the insured under the policy in thissituation while protecting the right of the insurer? Or, perhapsyou are the attorney enlisted by the insurance company to offer acoverage opinion and recommendations for next steps. How would youadvise the insurer then?

Insurers generally find comfort in the knowledge that, even ifthey were confronted by a difficult and expensive liability casewhere coverage was not clear, they could offer their insured adefense under reservation of rights while the insurer continued toinvestigate the case. In the event that no coverage existed for theclaim, the insurer could recoup defense or settlementfees.