California courts have recently considered the many practical problems that would arise if insurers were permitted to defend less than 100% of the claims asserted against their policyholders. Thankfully for policyholders, the courts have recognized that insurers are required to provide a complete defense to their insureds, even when the claims against the insureds include both uncovered and potentially covered claim. In a recent decision, Presley Homes, Inc. v. American States Insurance Co. , the California Court of Appeal held that this 100% defense obligation does not arise from language in the insurance policies, but from public policy. The Court quoted language from a California Supreme Court decision, Buss v. Superior Court , affirming this obligation: “[W]e can, and do, justify the insurer’s duty to defend the entire ‘mixed’ action phrophylactically, as an obligation imposed by law in support of the policy. To defend meaningfully, the insurer must defend immediately. To defend immediately, it must defend entirely. It cannot parse the claims, dividing those that are at least potentially covered from those that are not.”
