Extract to table

The $10 million SIR must be fully exhausted before Clarendon's indemnity obligation attaches

This is a significant concession, as it confirms that the general insuring agreement is triggered and that any denial of coverage must rest on the application of a specific exclusion rather than on a failure to satisfy the basic coverage grant

Clarendon will argue that this is not a case where the exclusion applies to only some of the claims and the insurer must still defend the balance; rather, the entire action falls within the scope of the exclusion

An insurer that owes a duty to defend must continue to fund the insured's defense so long as there is any reasonable potential that the underlying claims could result in a covered loss

The insurer may not withdraw from the defense merely because it believes an exclusion may ultimately apply; rather, the insurer must fund the defense while reserving its right to contest coverage at a later date

If the Policy is governed by New York law, for example, the insurer's duty to defend is triggered whenever the allegations in the underlying complaint suggest a reasonable possibility of coverage, and the insurer must defend the entire action even if some claims are potentially excluded