Liberty Mutual ordered to pay $4.5M on a $25,000 policy

According to the district court, even absent bad faith, damages for breach of the duty to defend could be in excess of the policy limits and were “measured by the consequences proximately caused by the breach.” (Photo: Shutterstock)

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A federal district court in Illinois has ordered Liberty Mutual Fire Insurance Company to pay a $4.5 million judgment, plus interest, notwithstanding its policy’s $25,000 limits — and despite the fact that it did not find that the insurer had acted in bad faith in declining to defend a 16 year old in a negligence action.