The United States Court of Appeals for the Seventh Circuit recently estopped an insurer from asserting coverage defenses due to the insurer’s failure to defend its insured. Nat’l Am. Ins. Co. v. Artisan & Truckers Cas. Co., 796 F.3d 717 (7th Cir. 2015) (No. 14-2694). Insurer Artisan had refused to defend its insured as to an automobile accident lawsuit. It did so without filing a declaratory judgment action as to coverage. Meanwhile, insurer National American for another insured involved in the accident had defended its insured subject to a reservation of rights. After a settlement paid for by National American in the underlying accident lawsuit, National American sought subrogation and contribution from Artisan as well as various declarations. The lower court found in favor of National American. On appeal, the court began its analysis by reiterating well-establish Illinois law: (i) the duty to defend is broader than the duty to indemnify and is determined by the allegations in the complaint; (ii) the duty to defend applies if there is a possibility that the action falls within coverage; and (iii) the duty to defend applies to an entire action, even if some causes or theories of recovery fall outside of coverage. After finding a duty to defend, the court turned to the issue of estoppel. As the court reiterated, under Illinois law when a complaint alleges claims that may fall within coverage, an insurer refusing coverage has three options: (i) defend under a reservation of rights; (ii) seek a declaratory judgment excluding coverage; or (iii) do nothing and refuse to defend. If the insurer does nothing and refuses to defend, it will later be estopped from raising policy defenses to coverage. Because Artisan simply refused to defend, Artisan was estopped from asserting any coverage defenses.