Duty To Defend Despite A Self-Insured Retention Clause.

The issue here involved a Self-Insured Retention [SIR] clause in an insurance policy. The appellate court noted that some insurance policies expressly and unambiguously make payment of a SIR obligation a condition of any obligation under the policy, including the duty to defend.  Here, the policy stated in relevant part: “1. Our total liability for all damages will not exceed the limits of liability as stated in the Declarations and will apply in excess of the insured’s self-insured retention (the ‘Retained Limit’).” With regard to the duty to defend, the appellate court concluded: “Given the language of the policy, an insured could quite reasonably interpret it as providing a defense to arguably covered claims as soon as such claims are tendered and before any SIR has been paid. Thus, like the trial court, we find the defendant insurer in this equitable subrogation action had a duty to defend its insureds when large soil subsidence claims were made against them and without regard to the SIR provisions in their policies.” (American Safety Indemnity Company v. Admiral Insurance Company (Cal. App. Fourth Dist., Div. 1; September 27, 2013.) 220 Cal.App.4th 1.)