Insurance Defense

In insurance defense, the attorney represents either the insurance carrier itself, or the policyholder that the carrier is defending under the policy. The carrier pays the legal fees. The attorney's duty runs to the insured — but the relationship requires careful management when carrier and insured interests diverge. 

The duty to defend is broad in Colorado — it is triggered when the underlying complaint alleges any set of facts that might fall within the policy's coverage. If there is any doubt about whether a claim could be covered, that doubt is resolved in favor of the insured. Wrongful denial of a defense can constitute bad faith. 

A reservation of rights letter is issued by the insurer when it agrees to defend the policyholder but reserves the right to deny indemnification later, based on how the facts develop. It preserves the insurer's coverage defenses while fulfilling the immediate duty to defend. 

Bad faith occurs when an insurer unreasonably handles a claim — either denying it without proper investigation or making an unreasonably low offer. Colorado uses a reasonableness standard: the insurer must act as a reasonable insurer would in the same situation. 

It depends on the nature of the claim. General liability policies typically cover third-party bodily injury, property damage, and personal injury claims. Claims arising from professional services, intentional acts, or employment-related matters may require separate coverage.