Ninth Circuit Finds Bad Faith in Insurer’s Refusal to Defend Mixed Allegations

A panel of the Ninth Circuit held, in an unpublished opinion, that Allied World Specialty Insurance Company (Allied) must defend its insureds even though there were undisputedly excluded allegations of sexual abuse in the underlying complaint. Based upon a substantial body of cases setting forth the “potentiality standard” for determining the duty to defend, the Ninth Circuit held that the Allied policy provided defense coverage because there were allegations that were “conceivably covered.”... By: Nossaman LLP