In a deeply divided 5-4 opinion, the Georgia Supreme Court on June 18, 2012 made it more difficult for an insurer to effectively reserve coverage defenses in the circumstance where an insurer is called on to defend an insured but doesn't have all the facts germane to support (and thereby reserve) all possible coverage defenses.   

In Hoover v. Maxum Indemnity Company, the Court ruled that an insurer could not both deny the claim outright under the employer's liability exclusion and simultaneously reserve the right to assert that another coverage defense may also apply. The opinion holds that an insurer can deny coverage and refuse to defend, or it can defend under a reservation of rights, but it cannot do some combination of the two.  An attempt to reserve unspecified coverage defenses that "may" apply is not good enough and now all coverage defenses are to be stated or risk waiver. 

Justice Melton wrote in the dissent, "Contrary to the majority opinion, Georgia law does not broadly provide that 'an insurer cannot both deny a claim outright and reserve the right to assert a different defense in the future.' As this pivotal statement of the law is incorrect and creates a new rule contrary to established precedent both in Georgia and a large majority of other jurisdictions, I disagree with all of the majority's analysis."

If you have any questions about this opinion and the new rules it imposes on a specific fact pattern, please do not hesitate to call me. Click here to read the entire opinion.

Sincerely,