Judgment Eliminating Defamation Coverage Defeats Coverage
Read the full article at https://lnkd.in/gr7PBs87 and see the full video at https://lnkd.in/gJRsAPGc and at https://lnkd.in/gJ39MURU and at https://zalma.com/blog plus more than 4300 blog posts.
See the full video at https://rumble.com/v1h2cyp-duty-to-defend-is-not-unlimited.html and at
Although the duty to defend is exceedingly broad the obligation of an insurer to defend and insured is not unlimited. In University Of Louisville v. Kentucky School Boards Insurance Trust And Cyril William Helm, No. 2021-CA-1066-MR, Court of Appeals of Kentucky (August 19, 2022) the University of Louisville (the “University”) appealed from the summary judgment in favor of Kentucky School Boards Insurance Trust (KSBIT) regarding KSBIT’s duty to provide a defense and indemnification in a separate circuit court case pursuant to a policy of insurance.
KSBIT is a domestic insurer that was created in 1978 to provide liability coverage to educational entities via a non-profit self-insurance pool of funds. KSBIT issued a general liability insurance policy to the University, which was renewed for several years. The Coverage B section of the policy addresses coverage for personal and advertising liability, and Section I(B)(1)(a) provides in relevant part that “[w]e [KSBIT] will pay those sums that the Member [the University] becomes legally obligated to pay as damages because of ‘personal injury’ or ‘advertising injury’ to which this coverage part applies.” In the definitional section of the policy, Section V(10) defines “personal injury” as: False arrest, detention or imprisonment; Malicious prosecution; the wrongful eviction from, wrongful entry into, or invasion of the right of a private occupancy of a room, dwelling or premises that a person occupies by or on behalf of its owner, landlord or lessor; oral or written publication of material that slanders or libels a person or organization or disparages a person’s or organization’s goods, products or services; oral or written publication of material that violates a person’s right of privacy; or mental injury, mental anguish, shock, humiliation, defamation, and damage to professional reputation.
The underlying matter began with a suit for a declaratory judgment by KSBIT , in January 2021 related to the policy. In this action, KSBIT sought a declaration that it did not have any obligation under the insurance policy to defend or indemnify the University as a result of a Kentucky Whistleblower Act claim filed by Dr. Cyril Helm (Helm v. University of Louisville, Jefferson Circuit Court Case No. 15-CI-01410).
FACTS
Dr. Helm’s dispute with the University began in 2009, after his colleagues had alleged he had committed plagiarism or other misconduct in his research. Dr. Helm went on to file several lawsuits against the University and his colleagues arising from the misconduct allegations and the University’s investigation into whether he had engaged in misconduct, including the one noted above.
In the lawsuit before the court Dr. Helm alleged that he had suffered a personal injury, and KSBIT provided a defense to the University subject to a reservation of rights. Dr. Helm pled a claim for damages, including substantial losses in earnings, job experience, and benefits; damage to his academic reputation; and emotional and physical stress. He sought compensatory and punitive damages as well as costs and attorney fees.
The Jefferson Circuit Court ruled that Dr. Helm could not recover damages for mental anguish/pain and suffering, front pay, or from having to sell his house in a certain market. It also dismissed Dr. Helm’s claim for punitive damages. The only remaining claims were for back pay and attorney fees.
Because Dr. Helm’s claims for back pay and attorney fees did not arise from a personal injury as defined in the policy, KSBIT alleged that there was no longer any factual or legal basis under the policy requiring it to defend or indemnify the University in Dr. Helm’s underlying suit. Therefore, KSBIT sought a declaration that it did not have an obligation to further defend or indemnify the University for the claims Dr. Helm asserted in his underlying action.
The circuit court entered an order granting summary judgment to KSBIT, rejecting the University’s arguments and holding that KSBIT was not required to provide a continuing defense to the University.
ANALYSIS
In its summary judgment the circuit court rejected the University’s argument that the back pay and attorney fees grew out of, flowed from, or had an incidental relationship with Dr. Helm’s claimed damages. It agreed with KSBIT that Dr. Helm’s remaining alleged damages did not arise from the policy’s definition of personal injury. The court therefore held that under the policy’s definition of personal injury, KSBIT was not required to continue to provide a defense to the University against Dr. Helm’s claims.
The proper standard for the analysis of insurance contracts in Kentucky is a subjective one. Terms of insurance contracts that have no technical meaning in law and are to be interpreted according to the usage of the average man and as they would be read and understood by him in the light of the prevailing rule that uncertainties and ambiguities must be resolved in favor of the insured.
In Kentucky, as in all jurisdictions, that an insurer has a duty to defend if there is an allegation which might come within the coverage terms of the insurance policy, but this duty ends once the insurer establishes that the liability is in fact not covered by the policy. Once the Jefferson Circuit Court ruled that Dr. Helm was not able to recover damages for mental anguish, pain and suffering, front pay, or having to sell his house in a certain market, he was only able to recover damages for six months of back pay and attorney fees.
The court agreed with KSBIT that its duty to provide coverage ended once the Jefferson Circuit Court ruled that Dr. Helm’s damages were limited to back pay and attorney fees.
Attorney fees are not compensatory damages because any award does not compensate the plaintiff for any wrong done by the defendant. Therefore, the circuit court did not err as a matter of law in concluding that KSBIT was not required to continue to provide coverage based upon the policy’s definition of personal injury.
Contrary to the allegations of the university the circuit court properly concluded that an insurer has a duty to defend if there is an allegation which might come within the coverage terms of the insurance policy, but this duty ends once the insurer establishes that the liability is in fact not covered by the policy.
The circuit court noted that KSBIT had provided a defense in Dr. Helm’s action and won, meaning that there was no need to prosecute an appeal on the University’s behalf. There was no continuing duty for KSBIT to provide coverage to the University in Dr. Helm’s action.
ZALMA OPINION
This case clearly established that the broad duty to defend is not an unlimited duty. Before an insurer is obligated to defend an insured there must be an action for a tort that the insurer agreed to defend and/or indemnify the insured. KSBIT defended the University successfully and obtained a favorable judgment eliminating all charges of “Personal Injury” leaving only contract damages for back pay. The win, on behalf of the University, eliminated any further obligation KSBIT had to indemnify and therefore any obligation to defend the University. The University did not appreciate the win and tried to get defense for the remaining allegations, for injuries and claims not covered by a liability insurance policy.
(c) 2022 Barry Zalma & ClaimSchool, Inc.
Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 54 years in the insurance business. He is available at http://www.zalma.com and [email protected].
Subscribe and receive videos limited to subscribers of Excellence in Claims Handling at locals.com https://zalmaoninsurance.locals.com/subscribe.
Subscribe to Excellence in Claims Handling at https://barryzalma.substack.com/welcome.
Write to Mr. Zalma at [email protected]; http://www.zalma.com; http://zalma.com/blog; daily articles are published at https://zalma.substack.com.
Go to the podcast Zalma On Insurance at https://anchor.fm/barry-zalma; Follow Mr. Zalma on Twitter at https://twitter.com/bzalma; Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; Go to the Insurance Claims Library – https://zalma.com/blog/insurance-claims-library/
Happy Law Day
ZIFL – Volume 30, Issue 9 – May 1, 2026
Read the full article at https://www.linkedin.com/pulse/zalmas-insurance-fraud-letter-may-1-2026-barry-zalma-esq-cfe-2tywc, see the video at at and at https://zalma.com/blog plus more than 5300 posts.
THE SOURCE FOR THE INSURANCE FRAUD PROFESSIONAL
ZIFL – Volume 30, Issue 9 – May 1, 2026
Zalma’s Insurance Fraud Letter (ZIFL) continues its 30th year of publication dedicated to those involved in reducing the effect of insurance fraud. ZIFL is published 24 times a year and is written by Barry Zalma.
DOJ Creates National Fraud Enforcement Division
Will the Feds Take on Insurance Fraud? Possibly as Part of a National Anti-Fraud Effort
On April 7, 2026, the Acting Attorney General, Todd Blanche, issued a memorandum establishing the Department of Justice National Fraud Enforcement Division (NFED). The memo describes an ambitious, but perhaps redundant, vision for this ...
When Abalone Died As a Result of Multiple Causes The Efficient Proximate Cause Requires Payment
Post number 5345
Read the full article at https://www.linkedin.com/pulse/efficient-proximate-cause-doctrine-saves-claim-barry-zalma-esq-cfe-yndlc, see the video at and at and at https://zalma.com/blog plus more than 5300 posts.
In American Abalone Farms, LLC v. Star Insurance Company et al., H052643, California Court of Appeals, Sixth District (April 27, 2026) the Court of Appeals dealt with an insurance coverage issue that required application of the efficient proximate cause doctrine.
FACTS
American Abalone Farms, LLC ("American Abalone" ) operates an aquaculture farm in Santa Cruz County, California, raising abalone in tanks. In August 2020, the CZU Lightning Complex Fires led to a prolonged power outage and road closures near the farm. As a result, the farm’s water pumps failed, causing the death of most of the ...
Breach of a Specific Condition Precedent Is a Complete Defense
See the video at and at and at https://zalma.com/blog plus more than 5300 posts.
In United Services Automobile Association and State Farm Mutual Automobile Insurance Company v. Anthony Wenzell, 2026 CO 25 (Colo. Apr. 27, 2026) Anthony Wenzell was rear-ended in a car accident. He had a significant prior 2014 accident that required back surgery.
Wenzell claimed underinsured-motorist (UIM) benefits under three policies: (1) the tortfeasor’s liability policy, (2) his own primary UIM policy with State Farm, and (3) an excess UIM policy issued by USAA (under his brother’s policy, which contained an “other insurance” clause making USAA’s coverage excess over any collectible insurance).
After receiving the claims, both USAA and State Farm repeatedly requested that Wenzell execute comprehensive medical-release authorizations so they could obtain his full medical records and ...
It is Fraud to Make the Same Claim Twice
Read the full article at https://www.linkedin.com/pulse/fraud-make-same-claim-twice-barry-zalma-esq-cfe-c4g8c and at https://zalma.com/blog.
Chutzpah: After Being Paid for a New Roof Insured Makes Second Claim For Same Damages
Post number 5347
No One is Entitled to be Paid for the Same Loss Twice
In Mohammed Ali Khalili v. State Farm Lloyds, No. 14-25-00611-CV, Court of Appeals of Texas (April 30, 2026) Khalili maintained a State Farm Lloyds homeowners insurance policy for decades. In 2008 he filed a roof-damage claim; State Farm paid him to replace the entire roof (shingles and gutters). Khalili never replaced the roof and repeated his claim.
BACKGROUND
In 2021 he filed a second roof claim. State Farm’s inspectors found the roof “very old” with extensive non-storm-related damage. The claim was denied because (1) the damage did not exceed the deductible and (2) State Farm had already paid for a full roof replacement.
PROCEDURAL HISTORY
State Farm filed motion for summary...
It is Fraud to Make the Same Claim Twice
Read the full article at https://www.linkedin.com/pulse/fraud-make-same-claim-twice-barry-zalma-esq-cfe-c4g8c and at https://zalma.com/blog.
Chutzpah: After Being Paid for a New Roof Insured Makes Second Claim For Same Damages
Post number 5347
No One is Entitled to be Paid for the Same Loss Twice
In Mohammed Ali Khalili v. State Farm Lloyds, No. 14-25-00611-CV, Court of Appeals of Texas (April 30, 2026) Khalili maintained a State Farm Lloyds homeowners insurance policy for decades. In 2008 he filed a roof-damage claim; State Farm paid him to replace the entire roof (shingles and gutters). Khalili never replaced the roof and repeated his claim.
BACKGROUND
In 2021 he filed a second roof claim. State Farm’s inspectors found the roof “very old” with extensive non-storm-related damage. The claim was denied because (1) the damage did not exceed the deductible and (2) State Farm had already paid for a full roof replacement.
PROCEDURAL HISTORY
State Farm filed motion for summary...
What Must be Done after Notice of a Claim is Received by the Insurer
Read the full article at https://lnkd.in/gzvvdkMZ and at https://zalma.com/blog.
Below you will read from this post until you reach the the end of this blog post as the free part of an Excellence in Claims Handling post. To read the full article and receive all articles for members of Excellence in Claims Handling you should consider joining as a paid member to get full access to articles for members only, to our news, analysis, insurance coverage, claims, insurance fraud and insurance webinars, by clicking at the subscription link below.
A first party property policy does not insure property: it insures a person, partnership, corporation or other entity against the risk of loss of the property. Before an insured can make a claim for indemnity under a policy of first party property insurance the insured must prove that there was damage to property the risk of loss of which was insured by the policy. The obligation imposed on the insured ...
