STATE

RULE

SUMMARY OF LAW

Alabama

No Ruling

The Alabama courts have not directly addressed whether an insurer may seek reimbursement of defense costs from an insured for uncovered claims.

However, an insurer may be able to recover amounts paid in settlement of a claim against an insured if it obtains “either a written agreement with its insured that it does not waive such a right by making the payment, or obtain a court order granting the insurer the authority to participate in the settlement without waiving any right to reimbursement.” Mt. Airy Ins. Co. v. Doe Law Firm , 668 So.2d 534, 538 (Ala. 1995).

Alaska

No Ruling

The Alaska courts have not addressed whether an insurer may seek reimbursement of defense costs from an insured for uncovered claims.

Arizona

No Ruling

The Arizona courts have not directly addressed whether an insurer may seek reimbursement of defense costs from an insured for uncovered claims.

Although an insurer must defend the entire suit if any claim alleged in the complaint falls within the policy's coverage, Arizona courts have not made any determination regarding “the insurer's duty to continue the defense if the litigation should reach a point at which it is impossible [for the claimant] to recover on any claim covered by the policy.” Western Cas. & Sur. Co. v. Int'l Spas of Arizona, Inc ., 130 Ariz. 76, 79-80 (Ariz. Ct. App. 1981).

Arkansas

Recoverable if timely reserved and specific notice

Under Arkansas law as predicted by a federal court, “absent an express agreement by the insured, an insurer who defends a claim for which coverage did not exist is entitled to reimbursement costs for both the settlement amount and litigation expenses only if the insurer: 1) timely and explicitly reserved its right to recoup the costs; and 2) provided specific and adequate notice of the possibility of reimbursement.” Nobel Ins. Co. v. Austin Powder Co ., 256 F.Supp 2d 937, 940 (W.D. Ark. 2003). A general reservation of rights to contest coverage is not sufficient to reserve an insurer's rights to seek reimbursement for uncovered claims. Id . However, an insured is not entitled to reimbursement if it settles a claim and subsequently seeks reimbursement from its insurer. Id . at 941; Dreyfus v. St. Paul Fire & Marine Ins. Co ., 238 Ark. 724 (1964).

Generally, an insurer must provide a defense if at least one of the allegations in a Complaint potentially implicate coverage. Allstate Ins. Co. v. Continental Cas. Co ., 1993 WL 149965, at *2-3 (1993).

California

Recoverable if reserved

An insurer may seek reimbursement for defense costs relating to claims that are not even potentially covered only if it properly reserves its right to do so. Buss v. Superior Court , 16 Cal. 4th 35, 60 n.27 (Cal. 1997); Scottsdale Ins. Co. v. MV Transp ., 31 Cal. Rptr.3d 147, 153-54 (Cal. 2005).

In an action in which some claims at least potentially implicate coverage and some claims do not implicate coverage, an insurer has a duty to defend the entire action. Buss , 16 Cal. 4th at 47-48. An insurer may not seek reimbursement for defending claims that are at least potentially covered. Id . at 49; see Scottsdale , 31 Cal. Rptr.3d at 157 (holding that “Buss' analysis of the reimbursement issue applies equally where the insurer, acting under a reservation of rights, defended an action in which, as it turns out, no claim was ever potentially covered”).

Colorado

Recoverable if reserved

It is not clear whether an insurer may allocate defense expenses between covered and uncovered claims. See Farmington Casualty Co. v. United Educators Ins. Risk Retention Group , 117 F.Supp.2d 1022, 1029 (court observing that it is “not persuaded that the appellate courts of Colorado would adopt the rule allowing allocation of expenses in a ‘mixed' case between the insurer and the insured, at least without some type of policy language that supports same…”).

Additionally, an insurer is denied its right to seek reimbursement if it breaches its duty to defend. Flannery v. Allstate Ins. Co ., 49 F. Supp. 2d 1223 (D. Colo. 1999).

If an insurer “believes that it is under no obligation to defend, [it should]…provide a defense to the insured under a reservation of rights to seek reimbursement should the facts at trial prove that the incident resulting in liability was not covered by the policy, or file a declaratory judgment action after the underlying case has been adjudicated.” Hecla Mining Co. v. New Hampshire Ins. Co ., 811 P.2d 1083, 1089 (Colo. 1991).

If a complaint provides multiple allegations, an insurer has a duty to defend the entire suit if any one claim is arguably covered. Horace Mann Ins. Co. v. Peters , 948 P.2d 80, 85 (Colo. App. 1997).

Connecticut

Recoverable

An insurer that provided defense of a suit with both covered and uncovered claims may seek reimbursement of defense costs expended on uncovered claims. Security Ins. Co. of Hartford v. Lumbermens Mut. Cas. Co ., 826 A.2d 107, 125 (Conn. 2003) (finding that the uncovered claims related to periods of self-insurance).

Delaware

Recoverable

An insurer may seek reimbursement from its insured for defense costs incurred by defending claims subsequently proven to fall outside coverage. Nationwide Mut. Ins. Co. v. Flagg , 789 A.2d 586. 597 (Del. Super. Ct. 2001).

An insurer has a duty to defend the action when at least one count or theory of the plaintiff's complaint is covered. Id .

District of Columbia

No Ruling

Although District of Columbia courts have not directly addressed whether an insurer may seek reimbursement of defense costs from an insured for uncovered claims, it is arguable that an insurer may not be obligated to reimburse non-covered claims when costs may be practicably apportioned between covered and non-covered claims. Armada de law Republica Argentina v. Yorkington Ltd. P'ship , 1995 WL 46394, at *16 (D.D.C. 1995) (noting that “when costs may practicably be apportioned between covered and noncovered claims, there is not compelling reason to require the insurance company to assume the costs of defending the noncovered claims”).

An insurer must provide a defense as to all allegations if at least one count of the plaintiff's complaint is potentially covered. Id. ; Washington Sports & Entm't v. United Coastal Ins. Co ., 7 F. Supp. 2d 1, 7 (D.D.C. 1998).

Florida

Recoverable if reserved and accepted

An insurer may seek reimbursement from its insured for costs expended in defending non-covered claims, but only if: 1) the defense was initially provided under a timely and expressly stated reservation of rights providing for attorney's fees and costs if the insurer prevailed, and 2) the insured accepts the insurer's offer of defense under such a reservation. Colony Ins. Co. v. G&E Tires & Service, Inc ., 777 So.2d 1034, 1037 (Fla. Dist. Ct. App. 2000); Wendy's of N.E. Florida, Inc. v. Vandergriff , 865 So.2d 520, 522 (Fla. Dist. Ct. App. 2003).

An insurer must provide a defense as to all allegations if at least one count of the plaintiff's complaint is potentially covered. Colony , 777 So.2d at 1037.

Georgia

Recoverable if agreement

An insurer may seek reimbursement for defending claims for which it has no duty to defend, but only if the insurer and insured come to an agreement providing for the insurer's right to seek reimbursement for non-covered claims. Transportation Ins. Co. v. Freedom Electronics, Inc ., 264 F.Supp. 2d. 1214, 1221 (N.D. Ga. 2003) (finding that “in the absence of a provision [of an agreement between insurer and insured] requiring reimbursement or case law instructing the court…the Court is unwilling to require [the insured] to repay costs already expended by [the insurer].”

An insurer has a duty to defend “even where the complaint against the insured sets fort false factual allegations which would bring the claim within the coverage of the policy.” Penn-America Ins. Co. v. Disabled American Veterans, Inc ., 268 Ga. 594 (Ga. 1997).

Hawaii

No Ruling

The Hawaii courts have not directly addressed whether an insurer may seek reimbursement of defense costs from an insured for uncovered claims.

However, an insurer's reservation of rights alone may not preserve its right to reimburse non-covered defense costs. First Ins. Co. of Hawaii v. Minami , 66 Haw. 413, 417, 422 (Haw. 1983) (holding that “affording an insured a defense under a reservation of rights agreement merely retains any defenses the insurer has under its policy; it does not relieve the insurer of the costs incurred in defending its insured where the insurer was obligated, in the first instance, to provide such a defense”).

The duty to defend arises “whenever there is a potential for indemnification liability of the insurer to the insured.” Hawaiin Holiday Macadamia Nut Co., Inc. v. Industrial Indem. Co ., 76 Hawai'i 166, 169 (Haw. 1994). Accordingly, whenever “a suit raises a potential for indemnification liability of the insurer to the insured, the insurer has a duty to accept the defense of the entire suit even though other claims of the complaint fall outside the policy's coverage.” Minami , 66 Haw. at 417.

Idaho

No Ruling

The Idaho courts have not directly addressed whether an insurer may seek reimbursement of defense costs from an insured for uncovered claims.

The duty to defend arises so long a claim is potentially covered under the insured's policy. City of Idaho Falls v. Home Indem. Co ., 126 Idaho 604, 608 (Idaho 1995).

Illinois

Not Recoverable

An insurer may not seek reimbursement for non-covered claims. General Agents Ins. Co. of America, Inc. v. Midwest Sporting Goods Co ., 828 N.E.2d 1092 (Ill. 2005). However, Illinois courts will enforce an insurer's right to seek reimbursement if such right is expressly included in the insurance policy. Id . at 1103.

An insurer may not refuse to defend unless the complaint clearly fails to allege facts that bring the action within, or potentially within, the insured's coverage. Id . at 1098

Indiana

No Ruling

The Indiana courts have not directly addressed whether an insurer may seek reimbursement of defense costs from an insured for uncovered claims.

An insurer owes no duty to defend if the pleadings fail to disclose a covered claim and investigation of ascertainable facts fails to reveal a covered claim. Trisler v. Indiana Ins. Co ., 575 N.E.2d 1021, 1023 (Ind. Ct. App. 1991).

Iowa

No Ruling

The Iowa courts have not directly addressed whether an insurer may seek reimbursement of defense costs from an insured for uncovered claims.

An insurer has a duty to defend any action in which there is “potential or possible liability to indemnify the insured based on the facts appearing at the outset of the case.” First Newton Nat'l Bank v. General Cas. Co. of Wisconsin , 426 N.W.2d 618, 623 (Iowa 1988).

Kansas

No Ruling

The Kansas courts have not directly addressed whether an insurer may seek reimbursement of defense costs from an insured for uncovered claims.

When a claimant's complaint alleges even potentially covered claims and non-covered claims, the insurer must defend the entire action. MGM, Inc. v. Liberty Mut. Ins. Co ., 253 Kan. 198, 202 (quoting State Farm Fire & Cas. Co. v. Finney , 244 Kan. 545, 553-54 (Kan. 1989)).

Kentucky

No Ruling

The Kentucky courts have not directly addressed whether an insurer may seek reimbursement of defense costs from an insured for uncovered claims.

An insurer “has a duty to defend if there is any allegation which potentially, possibly or might come within the coverage of the policy.” James Graham Brown Found., Inc. v. St. Paul Fire & Marine Ins. Co ., 814 S.W.2d 273, 279 (Ky. 1991).

Louisiana

No Ruling

The Louisiana courts have not directly addressed whether an insurer may seek reimbursement of defense costs from an insured for uncovered claims.

An insurer must defend the entire action when hit has a duty to defend any claim asserted. Riley Stocker Corp. v. Fidelity & Guar. Ins. Underwriters, Inc ., 26 F.3d 581, 589 (5th Cir. 1994).

Maine

Possibly Not Recoverable

The Maine Supreme Court rejected an insurer's argument that it was entitled to reimbursement of costs expended defending non-covered claims, noting that “[a] determination in insurer's subsequent declaratory relief action that insurer was not liable under policy terms would not have the effect of retroactively relieving insurer of duty to defend, but, once judgment in relief action became final, insurer's duty to defend actions ceased.” Worcester Ins. Co. v. Dairyland Ins. Co ., 555 A.2d 1050, 1053 (Me. 1989) (citation omitted).

An insurer has a duty to defend “[w]here there is [a] ‘potential shown in the complaint the facts ultimately proved may come within the coverage.'” Id . at 1053 (citation omitted).

Maryland

No Ruling

The Maryland courts have not directly addressed whether an insurer may seek reimbursement of defense costs from an insured for uncovered claims. See Loewenthal v. Security Ins. Co. of Hartford , 50 Md. App. 112, 123 n.5 (observing that authorities hold an insurer may seek reimbursement for non-covered claims if defense costs may be apportioned between covered and non-covered claims, but that “such a consideration is not the case here since defense costs can be readily apportioned”).

An insurer has a duty to defend an entire action when any claim is potentially covered . Utica Mut. Ins. Co. v. Miller , 130 Md. App. 373, 383 (Md. Ct. Spec. App. 2000).

Massachusetts

No Ruling

Massachusetts courts have not determined whether an insurer may seek reimbursement for any costs expended defending non-covered claims. However, an insurer does not have a right to reimbursement of defense costs if it initially breached its duty to defend. Dash v. Chicago Ins. Co ., 2004 WL 1932760, at *10 (D. Mass. Aug. 23, 2004).

An insurer has a duty to defend an entire action when any claim is potentially covered. Id.

Michigan

Probably recoverable if reserved or agreement

Although Michigan courts have not directly addressed whether insurers may seek reimbursement for non-covered claims, the Court of Appeals of Michigan observed that “assuming for the sake of argument that Michigan Millers [the insurer] had no duty to defend, we would agree with the trial court that Michigan Millers may not recover the costs it expended in defense of Bronson [the insured] in the absence of an agreement for reimbursement or a reservation of the right.” Michigan Millers Mut. Ins. Co. v. Bronson Plating Co ., 197 Mich. App. 482, 496 (Mich. Ct. App. 1992).

An insurer has a duty to defend the entire action when any claim is potentially covered. Arco Indus. Corp. v. Travelers Ins. Co ., 730 F.Supp. 59, 66 (W.D. Mich. 1989) (citation omitted).

Minnesota

Recoverable if reserved

Under Minnesota law as predicted by a federal court, an insurer may seek reimbursement for non-covered claims, but only if the insurer specifically reserves its right to reimbursement. Knapp v. Commonwealth Land Title Ins. Co., Inc. v. National Title Resources Corp ., 932 F.Supp. 1169, 1172 (D. Minn. 1996). A reservation of rights letter clearly reserving the insurer's right to seek reimbursement for attorney's fees and costs, and the insured's silence in response and subsequent acceptance of defense by insurer, “constitutes an implied agreement to the reservation of rights.” Id .

However, an insurer may not allocate defense costs between covered and non-covered claims if it breaches its duty to defend. Jostens, Inc. v. CNA Insurance/Continental Cas. Co. , 403 N.W.2d 657 (Minn. 1987) (insurer is responsible for all defense costs after it breached its duty to defend), overruled on other grounds by Northern States Power Co. v. Fidelity & Cas. Co . of N.Y ., 523 N.W.2d 657 (Minn. 1994).

An insurer has a duty to defend the entire action if any claim is arguably within the scope of coverage. Home Ins. Co. v. National Union Fire Ins. of Pittsburgh , 658 N.W.2d 522, 529 (Minn. 2003).

Missouri

No Ruling

Although Missouri courts have not directly addressed whether an insurer may seek reimbursement for non-covered claims, an insurer is not entitled to reimbursement of defense costs incurred prior to any determination of whether claims are covered under the policy. Liberty Mutual Ins. Co. v. FAG Bearings Corp ., 153 F.3d 919, 924 (8th Cir. 1998).

An insurer is obligated to defend the insured so long as there is any question as to whether the claims are covered by the policies. Id .

Montana

Recoverable if reserved, specific notice and no objection

An insurer may seek reimbursement of costs expended defending non-covered claims when 1) it timely and explicitly reserves its right of reimbursement, 2) provides specific and adequate notice of the possibility of reimbursement, and 3) the insured does not object to the insurer's tender of defense under a reservation of rights. Traveler's Cas. & Sur. Co. v. Ribi Immunochem Research, Inc ., 108 P.3d 469, 480 (Mont. 2005).

An insurer has a duty to defend “when a complaint filed against its insured sets forth facts which bring the event within the policy provisions.” Graber v. State Farm Fire & Cas. Co ., 244 Mont. 265, 270 (Mont. 1990).

Nebraska

No Ruling

The Nebraska courts have not directly addressed whether an insurer may seek reimbursement of defense costs from an insured for uncovered claims.

An insurer has a duty to defend the insured whenever it alleges facts giving rise to liability under the policy. John Markel Ford, Inc. v. Auto-Owners Ins. Co ., 249 Neb. 286, 295 (Neb. 1996). An insurer may properly refuse to defend the insured when the insured alleges no facts giving rise to potential coverage. Allied Mut. Ins. Co. v. State Farm Mut. Auto. Ins. Co ., 243 Neb. 779, 784 (Neb. 1993).

Nevada

Recoverable if reserved and specific notice

An insurer may seek reimbursement of costs expended defending claims “not potentially covered under the insurance policy only if there was a clear understanding between the parties” that the insurer reserved the right to reimbursement for investigation and/or defense costs. Capitol Indem. Corp. v. Blazer , 51 F.Supp.2d 1080, 1090 (D. Nev. 1999). The insurer must provide “unambiguous notice that it may later be held responsible for costs incurred.” Id . (citation omitted).

An insurer's duty to defend arises whenever it “ascertains facts which give rise to the potential of liability under the policy.” United Nat'l Ins. Co. v. Frontier Ins. Co ., 99 P.3d 1153, 1157 (Nev. 2004).

New Hampshire

No Ruling

The New Hampshire courts have not directly addressed whether an insurer may seek reimbursement of defense costs from an insured for uncovered claims

An insurer has a duty to defend the insured when the Complaint alleges sufficient facts to bring it within the terms of the policy, even though the suit “may eventually be found to be without merit.” SIG Arms Inc. v. Employers Ins. of Wausau, et al ., 122 F. Supp.2d 255, 259 (D. N.H. 2000). .

New Jersey

Recoverable

An insurer must defend the insured when the Complaint alleges “a general basis of liability within the covenant to pay.” Burd v. Sussex Mut. Ins. Co., 56 N.J. 383, 388 (N.J. 1970).

If an insurer does not initially undertake the defense of the insured, an insurer must reimburse the insured if it is subsequently determined that the claim was within the policy's coverage. Burd, 56 N.J. at 390 (N.J. 1970). Additionally, if an insured's delay in notifying the insurer of relevant information prevents the insurer from assuming control of the defense, “the insurance company is liable only for that portion of the defense costs arising after it was informed of the facts triggering the duty to defend.” SL Indus., Inc. v. American Motorists Ins. Co., 128 N.J. 188, 200 (N.J. 1992).

If an insurer wrongfully refuses to defend an action and is required to reimburse the insured's defense costs, “it's duty to reimburse is limited to allegations covered under the policy, provided that the defense costs can be apportioned between covered and non-covered claims.” Id. at 214-15. If defense costs cannot be apportioned between covered and non-covered claims, the insurer “must assume the costs of the defense for both covered and non-covered claims.” Id.

New Mexico

Recoverable if reserved

Applying New Mexico law, a federal court sitting in Louisiana held that an insurer that timely and specifically reserves its right to seek reimbursement of defense costs may seek reimbursement for non-covered claims. Resure, Inc. v. Chemical Distributors, Inc ., 927 F.Supp. 190, 194 (M.D. La. 1996).

An insurer has a duty to defend when the allegations in the Complaint or the known but unpleaded facts arguably fall within the scope of coverage. American Gen. Fire & Cas. Co. v. Progressive Cas. Co ., 110 N.M. 741, 744 (N.M. 1990).

New York

Recoverable if reserved and no objection

An insurer may seek reimbursement of non-covered costs if it 1) it reserves its right to seek reimbursement of costs expended by the insured defending claims to which it did not have a duty to defend; and 2) the insured does not expressly object to the insurer's reservation of its right to seek reimbursement of non-covered costs. Gotham Ins. Co. v. GLNX, Inc ., 1993 WL 312243 (S.D.N.Y. 1993); Federal Ins. Co. v. Kozlowski , 18 A.D.3d 33, 42 (N.Y. App. Div. 2005).

An insurer must defend the insured for covered and non-covered claims “if the latter are intertwined with covered claims.” Kozlowski , 18 A.D.3d at 41.

North Carolina

No Ruling

The North Carolina courts have not directly addressed whether an insurer may seek reimbursement of defense costs from an insured for uncovered claims.

An insurer has a duty to defend an entire action when any claim is covered. Waste Mgmt. of Carolinas, Inc. v. Peerless Ins. Co ., 315 N.C. 688, 691 n.2 (N.C. 1986) (observing that “allegations of facts that describe a hybrid of covered and excluded events or pleadings that disclose a mere possibility that the insured is liable [and that the potential liability is covered] suffice to impose a duty to defend upon the insured”).

North Dakota

No Ruling

The North Dakota courts have not directly addressed whether an insurer may seek reimbursement of defense costs from an insured for uncovered claims.

An insurer has a duty to defend an entire action when any claim is potentially covered. Rolette County v. Western Cas. & Sur. Co ., 452 F.Supp. 125, 126-27 (D. N.D. 1978) (noting that “[w]hen multiple claims are asserted in the complaint against the insured, the insurer has a duty to accept the defense of the entire lawsuit as long as one of the claims is within the policy's coverage”).

Ohio

Recoverable if reserved, specific notice, and no objection

Under Ohio law as predicted by the Sixth Circuit, an insurer is entitled to seek reimbursement for non-covered claims so long as it 1) “timely and explicitly” reserves its right to recoup the costs; and 2) provides “specific and adequate notice of the possibility of reimbursement;” and 3) the insured does not object to the reservation of the insurer's right to recoup costs. United Nat'l Ins. Co. v. SST Fitness Corp ., 309 F.3d 914, 920-21 (6th Cir. 2002).

An insurer has a duty to defend when the Complaint alleges a claim “potentially or arguably within the policy coverage, or there is some doubt as to whether a theory of recovery within the policy coverage has been pleaded.” Sanderson v. Ohio Edison Co ., 69 Ohio St.3d 582, 585-86 (Ohio 1994) (citation omitted).

Oklahoma

Possibly Not Recoverable

A federal court sitting in Oklahoma, citing its reluctance to recognize a right of reimbursement provided under Oklahoma law and that apportionment of defense costs between covered and non-covered claims may not be feasible under the facts before it, declined the insurer's request to allocate defense costs between covered and non-covered claims. Federal Ins. Co. v. Southwestern Wire Cloth, Inc ., 1999 WL 33544427 (N.D. Okla. 1999); see First Bank of Turley , 928 P.2d at 305 (holding that “an insurer's refusal to defend [in breach of its duty to defend]…renders the insurer liable for all reasonable expenses incurred by an insured in defense of a third-party action”).

An insurer has a duty to defend when it “ascertains the presence of facts that give rise to the potential of liability under the policy.” First Bank of Turley , 928 P.2d at 303.

Oregon

No Ruling

The Oregon courts have not directly addressed whether an insurer may seek reimbursement of defense costs from an insured for uncovered claims.

An insurer has a duty to defend the entire action “[i]f the complaint alleges facts that, if proved, would impose liability covered by the policy…even if some of the conduct alleged would not be covered.” Drake v. Mutual of Enumclaw Ins. Co ., 167 Or. App. 475, 478 (Or. Ct. App. 2000).

Pennsylvania

Possibly Not Recoverable

The Rohm and Haas Co. v. Continental Casualty Co. court declined to recognize the insurer's right to seek reimbursement because 1) an insurer must defend until “the insurer can confine the possibility of recovery to claims outside the coverage of the policy,” and 2) all relevant claims were covered. Rohm & Haas , 1997 WL 1433819, 35 Phila. 193 (Pa. C.P. 1997) (judgment vacated on other grounds). But see Federal Ins. Co. v. Susquehanna Broadcasting Co., 727 F. Supp. 169, 172, 172 n.3 (M.D. Penn. 1989) (finding that insured was not prejudiced by insurer's reservation of its right to seek reimbursement of defense costs, and that insurer “is not entitled to reimbursement of any of its defense costs incurred until the time of the termination” of another action).

An insurer's duty to defend arises “whenever allegations against the insured state a claim to which the policy potentially applies even if the allegations are ‘groundless, false or fraudulent.'” American Contract Bridge League v. Nationwide Mut. Fire Ins. Co., 752 F. 2d. 71, 75 (3d Cir. 1985) (citation omitted).

Rhode Island

No Ruling

The Rhode Island courts have not directly addressed whether an insurer may seek reimbursement of defense costs from an insured for uncovered claims.

An insurer has an “absolute duty to defend” when the complaint alleges facts or claims that “bring the case within or potentially within the coverage of the policy.” Michaud v. Merrimack Mut. Fire Ins. Co ., 1994 WL 774683, at *4 (D. R.I. 1994).

South Carolina

No Ruling

The South Carolina courts have not directly addressed whether an insurer may seek reimbursement of defense costs from an insured for uncovered claims.

An insurer has a duty to defend “a suit against the insured where the complaint in such suit alleges a state of facts within the coverage of the policy.” Hartford Accident & Indem. Co. v. South Carolina Ins. Co ., 252 S.C. 428, 434 (S.C. 1969).

South Dakota

No Ruling

The South Dakota courts have not directly addressed whether an insurer may seek reimbursement of defense costs from an insured for uncovered claims.

An insurer is obligated to defend claims “potentially not covered, including those that are groundless, false, or fraudulent.” St. Paul Fire & Marine Ins. Co. v. Engelmann , 2002 SD 8, 21 (S.D. 2002).

Tennessee

No Ruling

The Tennessee courts have not directly addressed whether an insurer may seek reimbursement of defense costs from an insured for uncovered claims.

An insurer has a duty to defend the entire action unless “it is plain from the face of the complaint that the allegations fails to state facts that bring the case within or potentially within the policy's coverage.” York v. Vulcan Materials Co ., 63 S.W.3d 384, 388 (Tenn. Ct. App. 2001).

Texas

Recoverable if reserved and agreement

An insurer may seek reimbursement for non-covered costs if 1) the insurer specifically reserves its right to seek reimbursement of defense costs, and 2) the record reflects an agreement or understanding by the insured that it must reimburse non-covered defense costs. Matagorda County v. Texas Ass'n of Counties Gov't Risk Management Pool , 975 S.W.2d 782, 784 (Tex. App. 1998).

An insurer is obligated to defend the entire action “if the plaintiff's pleadings ‘potentially' state a claim within coverage.” Transport Intern. Pool, Inc. v. Continental Ins. Co ., 2005 WL 1294392, at *1 (Tex. App. 2005).

Utah

Recoverable

An insurer that is able to demonstrate that the defense costs may be clearly apportioned among covered and non-covered claims is only obligated to pay only covered claims. Crist v. Insurance Co. of North America , 529 F. Supp. 601, 605 (D. Utah 1982). An insurer bears a heavy burden of proof on this issue. Id .

An insurer has a duty to defend when the complaint contains allegations “could result in liability under the policy.” Overthrust Constructors, Inc. v. Home Ins. Co ., 676 F. Supp. 1086, 1088-89 (D. Utah 1987).

Vermont

Possibly Recoverable

A federal court predicting Vermont law observes that “courts generally apportion the fees where the non-covered claims can be ‘clearly be distinguished from the covered claims.'” Burlington Drug Co., Inc. v. Royal Globe Ins. Co ., 616 F. Supp. 481, 483 (D. Vt. 1985) (citation omitted). However, if the covered claims and non-covered claims cannot be distinguished, the insurer is liable for all costs. Id .

An insurer is obligated to defend the insured “whenever it is clear that the claim against the insured might be of the type covered by the policy.” Garneau v. Curtis & Bedell, Inc ., 158 Vt. 363, 366 (Vt. 1992).

Virginia

Recoverable

An insurer may seek reimbursement for defending uncovered claims, but only if the costs expended defending uncovered claims can be readily apportioned from costs expended defending covered claims. Morrow Corp. v. Harleysville Mut. Ins. Co ., 101 F. Supp. 2d 422, 429-430 (E.D. Va. 2000).

An insurer has a duty to defend when “the allegations state a case which may be covered by the policy.” Travelers Indem. Co. v. Obenshain , 219 Va. 44, 46 (Va. 1978); see American & Foreign Ins. Co. v. Church Schools in the Diocese of Virginia , 645 F. Supp. 628, 631 (E.D. Va. 1986) (finding that under Virginia law, an insurer must defend unless “it clearly appears that the claims set forth in the motion for judgment are not covered…”).

Washington

Possibly Recoverable

Although the Washington courts have not directly addressed whether an insurer may seek reimbursement of defense costs from an insured for uncovered claims, there is some support for the ability of an insurer to seek reimbursement for covered claims under Washington law. A Washington court held out the possibility for an insurer to seek reimbursement of costs expended defending uncovered claims in holding that “where an insurer wrongfully refuses to defend, and there is no reasonable means of prorating the costs of defense between the covered and the not covered claims, then the insurer is liable for the entire costs of the defense.” National Steel Construction Co. v. National Union Fire Ins. Co. of Pittsburgh , 14 Wash. App. 573, 576 (Wash. Ct. App. 1975).

If “a complaint alleges several causes of action, some of which are covered and some of which are not, the insurer is obligated to defend only those actions that fall within the scope of coverage.” Prudential Property & Cas. Ins. Co ., 45 Wash. App. 111, 120 (Wash. Ct. App. 1986). However, “where an insurer wrongfully refuses to defend, it will be required to pay the judgment or settlement to the extent of its policy limits and also to reimburse the insured for his costs reasonably incurred in defense of the action.” Waite v. Aetna Cas. & Sur. Co ., 77 Wash. 2d 850, 851 (Wash. 1970).

West Virginia

No Ruling

The West Virginia courts have not directly addressed whether an insurer may seek reimbursement of defense costs from an insured for uncovered claims.

An insurer has a duty to defend the entire action so long as the complaint alleges covered claims. Robertson v. Fowler , 197 W. Va. 116, 118 (W. Va. 1996).

Wisconsin

Recoverable

If defense costs are “readily apportionable between the covered and the uncovered claims, the insurance company need pay only for the former.” Lockwood Int'l, B.V. v. Volm Bag Co., Inc ., 273 F.3d 741, 743 (7th Cir. 2001).

An insurer has a duty to defend if “there are allegations in the complaint which, if proven, would give rise to liability under the terms of the insurance policy…” Carney v. Village of Darien , 60 F.3d 1273, 1277 (7th Cir. 1995).

Wyoming

Not Recoverable

Unless the policy specifically permits defense costs to be allocated between covered and uncovered claims, an insurer may not allocate defense costs for uncovered claims to the insured through a reservation of rights letter. Shoshone First Bank v. Pacific Employers Ins. Co. , 2 P.3d 510, 515-17 (Wyo. 2000).

An insurer must defend the entire action if a claim “rationally falls within the policy coverage.” Shoshone , 2 P.3d at 513.