Insurance companies often use the words "tendering" a claim. They argue that policyholders must "tender a claim" by using exactly the right words in order to obtain coverage under the insurance policies. Specifically, they argue that until the claim is "tendered," they do not have a duty to defend the policyholder. They often define "tender" as notice of the claim against the policyholder, AND being asked by the policyholder to defend it, AND being given the opportunity to take over the control of the policyholder's defense.
Despite the use of the phrase "tendering the claim", no insurance policy requires that the policyholder "tender" a claim, a suit, or an occurrence. Insurance policies simply require "notice," not "tender." As one court wrote, the adoption of a "tender" requirement as demanded by the insurance companies would do nothing other than provide a "loophole through which the insurer may escape a lawful contractual obligation." Federated Mut. Ins. Co. v. State Farm Mut. Auto Ins. Co., 282 Ill. App.3d 716, 668 N.E.2d 627 (1996)[1]. If insurance carriers wanted to condition performance of their duties under the insurance policy on a requirement of "tender," they should have included specific language in their insurance policies. If they did not include "tender" language in their insurance policy, they cannot create a loophole to avoid coverage.
Numerous other courts have held that policyholders do not have to specifically request a defense or indemnity of a claim when they provide notice to their insurance company.[2] See Cincinnati Companies v. West American Insurance Company, 183 Ill.2d 317 (Ill. 1998)[3]; Employers Ins. of Wausau v. Ehlco Liquidating Trust, 186 Ill.2d 127 (Ill. 1999); 14 COUCH ON INSURANCE 3D ¶200.35 (1999)("In general, a tender of defense occurs once an insurer has been put on notice of a claim against the insured"); White Mountain Cable Constr. Corp. v. Transamerica Ins. Co., 137 N.H. 478 (1993)("In order to tender the defense, the insured need only put the insurer on notice of the claim"); Sampson v. Transamerica Ins. Co., 636 P.2d 32,44 (Cal. 1981)( the court rejected Transamerica's argument that it did not refuse to defend the lawsuit because the insured never demanded a defense as "sheer sophistry"); Towne Realty, Inc. v. Zurich Ins. Co., 201 Wis.2d 260 (1996); New NGC, Inc. v. ACE Am. Ins. Co., 105 F. Supp.3d 552 (W.D. N.C. 2015 (the duty to defend arises when the insurer receives notice of the underlying action); Kraus-Anderson Constr. Co. v. Transp. Ins. Co., 2011 Minn. App. Unpub. LEXIS 324 (Minn. App. 2011)[4]; Cobb v. Empire Fire & Marine Ins. Co., 488 So.2d 349, 350 (La.Ct. App. 1986); Widener Univ. v. Fred S. James & Co., 371 Pa. Super. 79 (1988); Huntsman Advance Materials, LLC v. OneBeacon Am. Ins. Co., 2012 U.S. Dist. LEXIS 19053 (D. Idaho. 2012); Ash Grove Cement Co. v. Liberty Mutual Ins. Co., 2011 U.S. Dist. LEXIS 65755 (D. Or. 2011); One Beacon America Ins. Co. v. Fireman's Fund Ins. Co., 175 Cal. App.4th 183 (Cal. App.2 Dist. 2009)[5]. In Home Insurance Company v. National Union Fire Insurance Company of Pittsburgh, Pennsylvania, 658 N.W.2d 522, 532 (Minn. 2003), the court reasoned:
We agree with the supreme courts of Illinois, New Hampshire, and Wisconsin that sound public policy does not support a rule that requires insureds to expressly request a defense in order to trigger the duty to defend. Three broad reasons support defining "tender" as giving the insurer notice and opportunity to defend a covered lawsuit: first, it clarifies the duties of the parties early in the litigation; second, it acknowledges the greater knowledge and sophistication of the insurer; and third, it places no significant burden on insurers.
Policyholders who are faced with a failure to "tender" argument from their insurance carrier should push back and object to the argument as one that is not supported by the language in the policy and not supported by a majority of the courts.
