Page 54 - Reservation of Rights - Special Edition

Time for Providing Insured with Coverage Position/ Reservation of Rights
Within twenty-one days after receipt of proof of loss, the insurer must accept or deny coverage, unless more time is needed, in which case the insurer must notify the insured of that and continue to do so every 45 days thereafter until a determination of coverage is made. Ohio Admin. Code § 3901-1-54.
A Different Kind of Reservation of Rights Letter
In an interesting case captioned Chiquita Brands Internation- al, Inc v National Union Fire Insurance Co, 2015-Ohio-5477, a 1st Appellate District case out of Hamilton County, we have a different kind of Reservation of Rights letter upheld on appeal. Upon being named a defendant in several tort suits, Chiquita sought defense from National Union which denied defense. Chiquita sought coverage and the trial court
agreed. National Union began funding the defense and with each defense cost payment, sent a letter stating that it was reserving a right to seek reimbursement of the payments.
National Union obtained a reversal of the trial courts order and sought to recoup the over $11 million paid in defense costs plus $1 million plus in pre-judgment interest. The
trial court ruled in favor of National Union and the Court
of Appeals agreed. The holding is a narrow one. Where
the insurer does not provide a defense until after a court has entered judgment declaring the insurer has a duty to defend, the insured demands the insurer provide a defense, the insurer provides defense under a reservation of rights stating it may seek to be reimbursed, and later, an appellate court determines that a duty to defend never existed, then the insurer is entitled to be reimbursed for its defense costs under a theory of restitution.
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