Duty To Cooperate Ruling Narrows Insurers' Ability To Foreclose Coverage For Settled Class Action Claims

Insurance policies typically include a cooperation clause, which requires the insured to cooperate with the insurer in the defense of a covered claim. Insurers routinely use this clause as a sword against their insureds by arguing that some alleged failure by the insured violates the clause and voids valuable coverage.

The Pennsylvania Supreme Court put a tight lid on that strategy in a ruling decided July 21. In Babcock & Wilcox Co. v. American Nuclear Insurers et al., No. 2 WAP 2014 (July 21, 2015), the court held that the company's insurers could not avoid coverage for an $80 million class action settlement of radiation exposure claims to which the insurers had not consented.