Louis Amelia, a National insured, lost control of his vehicle and injured several individuals, resulting in a number of lawsuits.  National initially disclaimed coverage, but was ordered to provide primary coverage in a declaratory judgment action, with Liberty providing excess.  National settled a number of the lawsuits, and exhausted its $1 million coverage limits.  National therefore refused to pay about $50,000 in additional defense costs because its limits had been exhausted.  Indeed, the National policy provided that its duty to defend ended when its limits were up.

Seems simple, right?  Not in the world of New York auto coverage.  Liberty filed suit, and the appellate court held that, pursuant to New York Insurance Department regulations and other precedent, National was not off of the hook despite the policy language and despite having no limits left.  New York law requires an automobile liability insurer to pay all defense costs until a case ends.  The trial court decision awarding Liberty summary judgment was thus upheld.

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