October 4, 2006
United States Liability Insurance (“USLI”) recently prevailed in a challenging declaratory judgment action filed against it by Associated Industries of Kentucky, Inc. (“AIK”). The underlying litigation involved four lawsuits filed by various insureds of AIK Comp who had been assessed to pay over $74,000,000 for claims that had not been properly reserved. AIK, the sponsoring entity of AIK Comp, was named in all of these suits along with many current and former directors of AIK. USLI provided $10,000,000 of coverage to AIK through a non-profit professional liability policy. USLI denied coverage and elected not to defend AIK and its directors based upon an insurance program exclusion. AIK contended the exclusion was ambiguous and that USLI had a duty to defend.
O’Bryan, Brown and Toner represented USLI. They were successful in convincing the Court that the contractual language was not ambiguous and therefore there was no duty to defend. This result represents a hard fought victory for USLI who is an emerging specialty lines carrier in the U.S.