Homeowners Policy (HO)Question 359 of 531
A $100,000 Coverage E limit is paid out in full to settle one suit while a second claim from the same occurrence is pending. The insurer's duty to defend:
a.resumes when the policy renews next year
b.continues until the term expires
c.continues, defense being outside limits
d.ends, the limit having been exhausted
Explanation
Defense costs are paid in addition to the limit of liability, which is why a $100,000 judgment plus $30,000 of defense can cost an insurer $130,000, but the duty to defend stops once the limit has been used up by payment of judgments or settlements. Here the whole $100,000 is gone, so the insurer withdraws. Renewal opens a fresh limit for later occurrences, not for this one.
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