An Insurer That Never Owed A Duty To Defend Is Entitled To Reimbursement

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Denying a defense when there is even a vague possibility of coverage is dangerous to an insurer and can, if coverage exists, cost it unlimited punitive damages. For that reason insurers provide a defense subject to a complete reservation of rights that allows the insurer may recover from the insured the money expended for defense under the reservation of rights.

In Nautilus Insurance Company v. Access Medical, LLC; Robert Clark Wood, II; And Flournoy Management LLC, 137 Nev., Advance Opinion 10 No. 79130, Supreme Court Of The State Of Nevada (March 11, 2021) the Nevada Supreme Court established the right to reimbursement under a theory of unjust enrichment.

ZALMA OPINION

An insurer that believes its policy provides no obligation to defend or indemnify its insured – but provides a defense under a reservation of rights. To allow the insured to benefit from the defense provided would allow the insured to be unjustly enriched. It must, in Nevada, reimburse the insurer for the monies paid to defend it.