In a strong reaffirmation of an insurer's broad duty to defend, the New York Court of Appeals held that an insurer that breaches the duty to defend may not later rely on policy exclusions to escape the duty to indemnify. K2 Inv. Grp., LLC, et al. v. Am. Guarantee & Liab. Ins. Co., --- N.E.2d ----, 2013 WL 2475869, 2013 N.Y. Slip Op. 04270 (June 11, 2013). In this case, a lawyer's malpractice insurer denied defense and indemnity coverage for a suit alleging malpractice in connection with unrecorded mortgages. After a default judgment in excess of the policy limits was entered against the lawyer, he assigned his coverage claims to the plaintiffs. In the coverage action, the trial court held the insurer owed the duty to defend, and having denied that duty, it was bound to pay the resulting judgment against its policyholder up to its limit of liability. The Court of Appeals affirmed, holding that once the insurer denied its broad duty to defend, it lost its right to rely on policy exclusions to avoid its indemnity obligation, even if those exclusions would have negated the duty to indemnify. "This rule will give insurers an incentive to defend the cases they are bound by law to defend, and thus to give insureds the full benefit of their bargain." Id. at 7.