Duty to Defend depends on Reception of Notice

The insured failed to notify the insurer for more than three years about an environmental claim. Nevertheless, it brought an action against the insurer seeking to recover costs it incurred defending against the claim prior to giving notice. This case went to the Supreme Court of Indiana for final adjudication. The case is Dreaded, Inc. v. St. Paul Guardian Insurance Company, 904 N.E.2d 1267 (2009).

In 2000, Dreaded received a letter from the Indiana Department of Environmental Management (IDEM) demanding that it investigate possible soil contamination at a former business site, and warning of potential enforcement actions and civil penalties. In response, Dreaded hired an attorney to defend it against the claim and hired an environmental contractor to investigate. In March of 2004, Dreaded notified its insurer, St. Paul, of the IDEM claim and requested that St. Paul take up its defense and reimburse Dreaded for defense costs incurred to that point. St. Paul reserved its right and refused to reimburse Dreaded for defense costs incurred prior to the March 2004 notice. Dreaded filed a lawsuit against St. Paul seeking full defense and indemnity.