Memo Essay Example | Topics and Well Written Essays - 1000 words - 3

Memo - Essay Example The insurer has a duty to defense before a court of law. Insurance companies lose the right to defense only when there is conflict of interest. Insurance companies do not compensate the insured automatically before thorough analysis of the real cause of the losses which call for compensation. According to Devine (2006), the insurance company has a duty and a right to defend itself basing this on the principles governing the insurance contracts as stipulated in insurance law. Mr. and Mrs. Turner entered into an insurance contract with Youngston Company when they took a cover against any liability that arises other than injuries resulting from discharge, release, dispersal or escape from pollutants. These clauses specified the kind and extent of losses to be compensated whenever such specific liability arises. The policy language excluded losses suffered due to discharge, dispersal, release, or escape of pollutants. From the excerpt, we noted that the child became ill because of too mu ch lead in the body system. Insurance company should defend itself basing this on the language of the cover i.e. the cover would not cover any liabilities resulting from losses suffered due to escape of pollutants. In addition, the company is not liable for the losses suffered by a third party. During inception of the insurance contract, neither Mr. and Mrs. Cavanaugh nor any other person who rented the apartment, was mention in the contract. Since, the child belongs to the third party; the insurance company has a duty to defense based on this. However, the insurance policy issued by the company did not specify exactly the boundaries of compensation. The exclusion language did not mention the specific pollutants which will be covered by the policy. In addition, the policy cover did not specify whether the company should compensate any damages suffered by the third party. It is therefore the decision of the court to