Zalma on Insurance
Education • Business
Insurance Claims professional presents articles and videos on insurance, insurance Claims and insurance law for insurance Claims adjusters, insurance professionals and insurance lawyers who wish to improve their skills and knowledge. Presented by an internationally recognized expert and author.
Interested? Want to learn more about the community?
August 24, 2022
Duty to Defend is not Unlimited

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/

00:10:29
Interested? Want to learn more about the community?
What else you may like…
Videos
Posts
8 hours ago
Zalma’s Insurance Fraud Letter – November 1, 2025

ZIFL – Volume 29, Issue 21

THE SOURCE FOR THE INSURANCE FRAUD PROFESSIONAL

Post 5220

Read the full article at https://lnkd.in/gRMJpi4s, see the video at https://lnkd.in/gwGSd6ZA & at https://lnkd.in/gbDiuFJy, and at https://zalma.com/blog plus more than 5200 posts.

See the video at & at https://rumble.com/v711hr0-zalmas-insurance-fraud-letter-november-1-2025.html

See the full 18 page issue of ZIFL at ZIFL-11-01-2025

Zalma’s Insurance Fraud Letter (ZIFL) continues its 29th year of publication dedicated to those involved in reducing the effect of insurance fraud. ZIFL is published 24 times a year by ClaimSchool and is written by Barry Zalma. It is provided FREE to anyone who visits the site at http://zalma.com/zalmas-insurance-fraud-letter-2/

Conviction for Health Insurance Fraud Upheld

Physician Conspired with Bonavilla to Effect Health Insurance Fraud

Dennis Davin Bonavilla was involved in an insurance fraud scheme as an executive of Free Choice Healthcare. The scheme targeted indigent patients, often on ...

00:10:22
October 31, 2025
The Zalma Philosophy of Claims Handling – Part 8

The Professional Claims Handler

Post 5218

Read the full article at https://www.linkedin.com/pulse/zalma-philosophy-claims-handling-part-8-barry-zalma-esq-cfe-zdwsc, see the full video at https://rumble.com/v70zl4s-the-zalma-philosophy-of-claims-handling-part-8.html and at https://youtu.be/MIYcF71ffRQ, and at https://zalma.com/blog plus more than 5200 posts.

Claims Commandment X – Thou Shall Not Pretend to be a Lawyer

Some experienced and professional claims people know the law in their area of expertise better than most lawyers.

Adjusters should be adjusters and leave lawyering to lawyers. Similarly, lawyers should be lawyers and never try to be adjusters.

Claims Commandment XI – Thou Shall Empathize With the Claimant

Everyone presenting a claim is unhappy, disturbed, shocked, injured and needs help.

Empathy is identification with and understanding of another’s situation, feelings, and motives. It is the ability to understand another person’s circumstances, point of view, thoughts, and feelings....

00:11:08
October 28, 2025
The Zalma Philosophy of Claims Handling – Part 6

HOW TO CREATE AN EXCELLENCE IN CLAIMS HANDLING PROGRAM

See the full video at https://rumble.com/v70wb2i-the-zalma-philosophy-of-claims-handling-part-6.html and at https://youtu.be/tL5nDKPEs40 and at https://zalma.com/blog plus more than 5200 posts.

Post 5217

This is a change from my normal blog postings. It is my attempt. in more than one post, to explain the need for professional claims representatives who comply with the basic custom and practice of the insurance industry.

An Excellence in Claims Handling program begins with a statement in the insurer’s claims manual or statement of professionalism that it is dedicated to providing excellence in claims handling to every insured who presents a claim.

The excellence in claims handling program should include, at a minimum:

A series of lectures supported by text materials explaining:
A definition of insurance.
How to read and understand an insurance policy.
How to interview an insured, witness, or claimant.
How to assist an insured in the insured’s obligation to ...

00:08:40
October 31, 2025
The Zalma Philosophy of Claims Handling – Part 9

The Professional Claims Handler
Post 5219

Posted on October 31, 2025 by Barry Zalma

An Insurance claims professionals should be a person who:

Can read and understand the insurance policies issued by the insurer.
Understands the promises made by the policy.
Understand their obligation, as an insurer’s claims staff, to fulfill the promises made.
Are competent investigators.
Have empathy and recognize the difference between empathy and sympathy.
Understand medicine relating to traumatic injuries and are sufficiently versed in tort law to deal with lawyers as equals.
Understand how to repair damage to real and personal property and the value of the repairs or the property.
Understand how to negotiate a fair and reasonable settlement with the insured that is fair and reasonable to both the insured and the insurer.

How to Create Claims Professionals

To avoid fraudulent claims, claims of breach of contract, bad faith, punitive damages, unresolved losses, and to make a profit, insurers ...

post photo preview
October 20, 2025
The Zalma Philosophy of Claims Handling – Part I

The History Behind the Creation of a Claims Handling Expert

The Insurance Industry Needs to Implement Excellence in Claims Handling or Fail
Post 5210

This is a change from my normal blog postings. It is my attempt. in more than one post, to explain the need for professional claims representatives who comply with the basic custom and practice of the insurance industry. This statement of my philosophy on claims handling starts with my history as a claims adjuster, insurance defense and coverage lawyer and insurance claims handling expert.
My Training to be an Insurance Claims Adjuster

When I was discharged from the US Army in 1967 I was hired as an insurance adjuster trainee by a professional and well respected insurance company. The insurer took a chance on me because I had been an Army Intelligence Investigator for my three years in the military and could use that training and experience to be a basis to become a professional insurance adjuster.

I was initially sat at a desk reading a text-book on insurance ...

post photo preview
October 20, 2025
The Zalma Philosophy of Claims Handling – Part I

The History Behind the Creation of a Claims Handling Expert

The Insurance Industry Needs to Implement Excellence in Claims Handling or Fail

Post 5210

This is a change from my normal blog postings. It is my attempt. in more than one post, to explain the need for professional claims representatives who comply with the basic custom and practice of the insurance industry. This statement of my philosophy on claims handling starts with my history as a claims adjuster, insurance defense and coverage lawyer and insurance claims handling expert.

My Training to be an Insurance Claims Adjuster

When I was discharged from the US Army in 1967 I was hired as an insurance adjuster trainee by a professional and well respected insurance company. The insurer took a chance on me because I had been an Army Intelligence Investigator for my three years in the military and could use that training and experience to be a basis to become a professional insurance adjuster.

I was initially sat at a desk reading a text-book on insurance ...

post photo preview
See More
Available on mobile and TV devices
google store google store app store app store
google store google store app tv store app tv store amazon store amazon store roku store roku store
Powered by Locals