Reverse Coverage Suits: What Happens When Policyholders Agree TO Defend And Indemnify Their Insurers

Increasingly, when settling coverage disputes,  insurers require policyholders to agree to defend and indemnify the insurer against any additional claims asserted against the insurer.  This produces the curious result that the policyholder and insurer functionally switch places.  For example, Hartford Fire Insurance Company recently sued its policyholder, Lanxess Sybron Chemicals Company.   Lanxess had settled a coverage dispute with Hartford concerning the Kearny Superfund Site in New Jersey.  As part of that settlement, Lanxess agreed to defend and indemnify Hartford against other claims involving the Kearny Site.  Hence, when Hartford was sued by another PRP at the Kearny Site (apparently an affiliate of Lanxess), Hartford sought to be defended and indemnified.  Lanxess, however, now playing the part of the insurer, declined to defend and indemnify, which prompted Hartford to file a "reverse coverage suit" in which the insurer sought coverage and the