California, United States of America
The following excerpt is from Advanced Network, Inc. v. Peerless Ins. Co., 10 Cal. Daily Op. Serv. 15, 119 Cal.Rptr.3d 17, 190 Cal.App.4th 1054, 2010 Daily Journal D.A.R. 18 (Cal. App. 2011):
3 An exception to the rule is that " 'the insurer's unconditional defense of an action brought against its insured constitutes a waiver of the terms of the policy and an estoppel of the insurer to assert such grounds.' " ( Miller v. Elite Ins. Co., supra, 100 Cal.App.3d at p. 755, 161 Cal.Rptr. 322.) That is not the scenario here.
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