Timing and settlement considerations when recoupment is sought in Buss cases

While decisions such as the California Supreme Court's ruling in Buss v. Superior Court (Transamerica Insurance Co.), have given insurers a forceful right to claim reimbursement for non-covered defense costs, that right is only as good as the remedy that protects it. Among the crucial questions affecting the efficacy of a Buss claim is the manner in which an insurer's rights may be strengthened or compromised by settlement opportunities. There are 3 issues to be considered: 1. timing - that is, the extent to which the settlement of liability cases may be decoupled from the resolution of coverage disputes, 2. the circumstances in which a liability settlement may undermine or thwart an insurers' rights, and 3. the alternative circumstances in which a settlement may actually strengthen an insurer's rights.