Are Plaintiff's Attorney Fees Covered Under a Standard Business Liability Policy?

The standard business liability policy says that the insurer will pay sums that the insured becomes legally obligated to pay as "damages." Payments of "damages" reduce the policy's limits of insurance. The supplementary payments provisions of the policy typically state that the insurer will pay, as to any suit it defends, specified costs and expenses in addition to the limits of insurance, including "costs taxed against the insured in the 'suit.'" Pursuant to California Code of Civil Procedure Section 1033.5, "costs taxed" include attorney fee awards when authorized by contract, statute or law. Is the liability insurer going to be obligated to pay attorney fees awarded to plaintiff against the insured defendant as "damages"? Is the insurer going to be obligated to pay the attorney fees award under the supplementary payments provisions?

Neil Selman has written an article, which has been published in the May 9, 2013 issue of the Los Angeles Daily Journal, in which he discusses, and provides his thoughts as to the answers to, these questions under current California insurance law.

Neil Selman is the founding and managing partner at Selman Breitman LLP and is highly-experienced at representing insurers in coverage and bad faith litigation.

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