New York State Court Rules That Darwin Has Duty To Defend But AIG Does Not, For Same Risk, Based On Differing Policy Language

New York state court Judge Shirley Werner Kornreich recently ruled that American International Group, Inc. ("AIG") didn't have to pay certain defense costs for various suits brought against QBE Holdings, Inc. and its affiliates (collectively, "QBE"), but that QBE's other insurer Darwin Select Insurance Co. ("Darwin") did, despite the apparent similarities in language of the policies issued by the insurers and the fact that both insurers promised to reimburse QBE's defense costs.  So what was the difference?  AIG's policies stated that AIG "shall have the right, but not the duty" to defend, whereas the Darwin policies stated that Darwin "shall have the right and duty" to defend.  This seemingly small variation made a significant difference in both the scope of defense coverage available under the policies and what QBE would have to prove to obtain coverage.