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Most insurance policies contains a clause that gives the insurer the right to defend against third-party claims asserted against the insured. (Photo: Shutterstock) Most insurance policies contains a clause that gives the insurer the right to defend against third-party claims asserted against the insured. (Photo: Shutterstock)

The U.S. Court of Appeals for the 10th Circuit has reinstated litigation filed by an insurer against its policyholder for settling a case without the insurer’s permission.

Bolt Factory Lofts Owners Association Inc. sued six contractors for alleged construction defects at a Denver condo development. Two of the contractors then brought third-party claims for negligence and breach of contract against three subcontractors, including Sierra Glass, which had a commercial general liability (CGL) policy through Auto-Owners Insurance, and a second CGL policy through AMCO. Both insurers agreed to defend and indemnify Sierra Glass for any damages covered under the policies. Before the trial, Sierra Glass agreed to pay Bolt Factory $350,000 and to confess judgment by not presenting a defense at trial.

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