A Pennsylvania federal court recently ruled that a professional liability insurer must defend its insured even in the face of allegations that if proven would preclude coverage. Navigators Ins. Co. v. Resnick Amsterdam Leshner, P.C.,No. 14-5158 (E.D. Pa. May 18, 2015). The insurance policy in question contained a provision precluding coverage for a claim arising from any act or omission the insured had a basis to believe, prior to policy inception, might reasonably be expected to be the basis of a claim against it. The policy also required the insurer to defend its insureds, even if allegations were groundless, false, or fraudulent. The insureds had been sued in a suit alleging they emailed confidential information of a client to third parties prior to the policy period. The insurer initially defended the insureds but then filed a declaratory judgment action. All parties filed cross motions for summary judgment. The court ruled that that prior knowledge provision operated as an exclusion, even though it did not appear in the exclusions section of the policy. As such, the insurer had the burden to prove the policy precluded coverage based on the insureds’ prior knowledge. This the insurer was unable to do, as it merely pointed to allegations in the underlying action – allegations that were unproven and which the insureds vehemently denied. The court ruled the insurer must defend the insureds, and must defend the entire underlying suit, even if there were other uncovered claims in the suit. The court also pointed to a policy exclusion for intentional conduct as supporting the insurer’s duty to defend, given the exclusion could not apply until there was a final adjudication in the underlying suit.