SB 617 Establishes rights of insurers to present reservation of rights to insured without breaching insurance contract, to defend against loss prior to garnishment, and to refuse to enter contracts to limit recovery
Sponsor: Rupp Co-Sponsor(s)
LR Number: 4628S.02C Fiscal Note available
Committee: Small Business, Insurance and Industry
Last Action: 5/16/2014 - S Informal Calendar S Bills for Perfection--SB 617-Parson, with SCS, SS for SCS & SA 1 (pending) Journal Page:
Title: SCS SB 617 Calendar Position:
Effective Date: August 28, 2014

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Current Bill Summary

SCS/SB 617 - Currently, case law has established that if an insurance company presents a reservation of rights to include reasons that may relieve them of a duty to defend or indemnify the insured, such reservation may be used as evidence as a breach of those duties. This act abrogates those holdings to allow insurance companies to provide a statement of a reservation of rights to an insured without such statement being used as evidence is a civil action against the insurer. This act also requires that in equitable garnishment actions against an insurer where the defendant to the primary action had contracted with the insurer against the losses leading to the garnishment, a judgment creditor must show that the insurer had an opportunity to defend against the loss or expressly declined to defend. This act also prohibits an insurer from being compelled to enter into contracts to limit recovery between its insured and any person with an unliquidated claim for damages against the insured.