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Insurer Must Pay for Cosby Civil Defense

By George Khoury, Esq. on June 13, 2018 | Last updated on March 21, 2019

In a surprising turn of events for Bill Cosby, the First Circuit Court of Appeals upheld a lower court ruling requiring the disgraced celebrity's insurer, AIG, to provide his defense in the defamation cases filed against him.

While the policy's terms regarding its duty to defend have exclusions for sexual misconduct, among many others, the court found that the defamation claims did not fall under the exclusions. The court was also adamant that their holding was case specific, and rather narrow to apply only to a policy holder.

Arising Out Of ...

The specific exclusion in the policy stated that claims "arising out of" sexual misconduct would not trigger the requirement. The court's analysis turned on the phrase "arising out of." It explained that the phrase, according to prior precedent, lands somewhere between "proximate causation" and the "but for" standard. It further reasoned that due to ambiguity between the way the phrase is used in Cosby's homeowners and umbrella policies, the court explained that less specific usage controlled because ambiguity in insurance contracts are read to favor the insured.

An Empty Win?

While Cosby may have come away with a win in this court battle, the court clarified that there is a distinct difference between an insurer's duty to defend and duty to indemnify. This ruling only provided that Cosby's insurer is required to provide a defense. If a judgment is rendered against Cosby, it is expected that a subsequent declaratory action will be filed to decide that issue.

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