Hunton Insurance Recovery Blog

Courts nationwide have long held that defense costs incurred by a policyholder are presumed reasonable where an insurer breaches its duty to defend. The North Carolina Business Court in an opinion written by Judge Mark Davis recently adopted this rule under North Carolina law in Murphy-Brown, LLC v. Ace American Insurance Company, 2024 WL 4327353 (N.C.Super. Sep. 25, 2024).

In Zurich American Insurance Co. v. Don Buchwald & Associates, Inc., 2018 N.Y. Slip. Op. 33325(U) (Sup. Ct. N.Y. County, Dec. 21, 2017), the Supreme Court of New York held that Zurich was obligated to defend a talent and literary agency against claims brought by Hulk Hogan alleging that the agency aided and abetted one of its agents—Tony Burton—in publishing racist and sexual footage of Hulk Hogan online.  The decision also gives ammunition to policyholders seeking to recover their fees incurred while litigating against an insurer’s improper denial of coverage.  The court found that the insureds had “been cast in a defensive posture” due to the insurer’s claims seeking a declaratory judgment, and that this justified a fee-shifting award.