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The Second Department held that an insurer may not recoup defense costs under a reservation of rights unless the insurance policy expressly allows it to do so.

To embed, copy and paste the code into your website or blog: Recoupment of defense costs (defense fees and costs) by insurers in the absence of a duty to indemnify under a liability policy is an unsettled issue in many states. In a recent decision, a New York intermediate appellate court held that even though there was no duty to indemnify an underlying personal injury action under a CGL policy, the insurer could not recoup the defense costs it had advanced under a reservation of rights (ROR) letter where the policy at issue provided for a duty to defend but did not contain an express contr...

N.Y. Court Takes Contrary Position on Insurers’ Right to Recoup Defense Costs By Eric Stern and Andrew Lipkowitz | January 21, 2021 It has long been understood that under New York law, an insurance company may recoup defense costs paid on behalf of an insured once it has been ultimately determined that there was no coverage in connection with the underlying action, provided that the insurer reserved its rights to seek such reimbursement. Multiple New York courts at both the trial and Appellate Division levels (New York’s intermediate appellate court), h...