Is a liability insurer permitted to assume and conduct the defense of an action brought against the insured?

California, United States of America


The following excerpt is from Melton v. Industrial Indemnity Co., 103 Cal.Rptr.2d 222 (Cal. App. 2001):

"'[I]f a liability insurer, with knowledge of a ground of forfeiture or noncoverage under the policy, assumes and conducts the defense of an action brought against the insured, without disclaiming liability and giving notice of its reservation of rights, it is thereafter precluded in an action upon the policy from setting up such ground of forfeiture or noncoverage. In other words, the insurer's unconditional defense of an action brought against its insured constitutes a waiver of the terms of the policy and an estoppel of the insurer to assert such grounds.'" (Miller v. Elite Ins. Co. (1980) 100 Cal.App.3d 739, 755.)

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