Insurance Contracts and Judicial Decisions Over Whether Insurers Must Defend Insureds That Violate Constitutional And Civil Rights: An Historical And Empirical Review Of Federal And State Court Declaratory Judgments 1900-2000
Torts and Insurance Law Journal
Empirical findings suggest that extralegal factors, such as geographic location, ethnicity, gender, disability, perceived sexual orientation, and age of third-party victims, influence judicial decisions as to whether liability carriers must defend or reimburse the costs of defending various lawsuits. After the introduction, Part II of this article presents a brief discussion of state and federal declaratory judgment statutes and of the public policy behind liability and indemnification insurance contracts. Part III examines the origin and scope of insurers’ duty to defend, duty to pay legal expenses, and duty to reimburse litigation costs when third-party victims sue policyholders. Part IV argues that extralegal variables are significantly more likely than state and federal legal doctrines to influence whether courts order insurers to defend alleged civil rights violators. More specifically, Part IV reports that courts are split over whether a legal defense or indemnification is warranted when the allegation concerns “disparate treatment” and “disparate impact” discrimination. Parts V through VIII discuss whether insurers must defend or indemnify the costs of defending specific types of discriminatory conduct. In Parts VI, VII, and VIII, it is demonstrated that insureds and insurers are more likely to receive favorable declarations depending on whether courts categorize the alleged discrimination in the underlying suit as ‘disparate treatment” or “disparate impact.” Finally, Part IX presents an empirical investigation of duty-to-defend and duty-to-indemnify declaratory judgments in state and federal courts between the years 1900 and 2000.
In the author’s view, courts permit nonlegal factors to influence when and to whom they will award declaratory relief. The reported data suggest that judges’ subtle biases and notions about who should receive the financial benefits flowing from liability coverage lead to convoluted and ultimately unfair declarations.
Willy E. Rice, Insurance Contracts and Judicial Decisions Over Whether Insurers Must Defend Insureds That Violate Constitutional And Civil Rights: An Historical And Empirical Review Of Federal And State Court Declaratory Judgments 1900-2000, 35 Tort & Ins. L.J. 995 (2000).