Reimbursing Insurers’ Defense Costs: Restitution and Mixed Actions

The pejorative “Indian giver” describes a person who, having given a gift to another, takes it back or demands its return. This childhood insult arguably has surfaced in the law of liability insurance. A liability insurer that provides its insured with a defense to a lawsuit, but that later seeks to recover from the insured the costs associated with the defense of uncovered claims, might be described by the insured or by an insensitive court as an Indian giver. Having promised to defend its insured even against suits that are “groundless, false or fraudulent," an insurer that later seeks the reimbursement of its costs associated with the defense of uncovered counts or claims is sure to be viewed as reneging on the bargain it struck with its insured.