Can an insurer reserve its right of reimbursement for defense costs under a reservation of rights?

MultiRegion, United States of America

The following excerpt is from Nautilus Ins. Co. v. Access Med., LLC, No. 17-16265, No. 17-16272, No. 17-16273 (9th Cir. 2019):

Courts that follow the majority rule, however, state that it is in the best interests of both parties to allow insurers to recoup their defense costs under a reservation of rights. "Without a right of reimbursement, an insurer might be tempted to refuse to defend an action in any partespecially an action with many claims that are not even potentially covered and only a few that arelest the insurer give, and the insured get, more than they agreed." Buss v. Superior Court, 939 P.2d 766, 778 (Cal. 1997).

We understand that "[w]here Nevada law is lacking, its courts have looked to the law of other jurisdictions, particularly California, for guidance." Eichacker v. Paul Reverse Life Ins. Co., 354 F.3d 1142, 1145 (9th Cir. 2004) (internal quotation marks omitted). Under California law, "the insurer can reserve its right of reimbursement for defense costs by itself, without the insured's agreement." Buss, 939 P.2d at 784 n.27. "If that conclusion is reached,

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