Failure to Defend
When Your Insurer Refuses to Stand by You, We Step In
One of the most important benefits of liability insurance is the duty to defend. If you're sued for a claim that is potentially covered under your policy, your insurer is legally obligated to provide a defense - even if the allegations are groundless or exaggerated. When they refuse, it’s more than frustrating - it may be a violation of the law.
At GPJ Legal, we represent policyholders and businesses across New Mexico in high-stakes disputes involving an insurer’s failure to defend. With more than 35 years of litigation experience and a strong background representing both insurers and the insured, we know how these cases are built.
What Is the Duty to Defend?
In liability policies (commercial, homeowner, auto, professional, etc.), the duty to defend means your insurer must provide legal representation if you're sued for a covered claim. This includes:
Appointing defense counsel at no cost to you
Paying legal fees and litigation costs
Defending against third-party claims - even if they're false or exaggerated
Resolving the case within policy limits
Importantly, the duty to defend is broader than the duty to indemnify. If there’s even a potential for coverage, the insurer must step in. When they don’t, they may be liable for bad faith.
Why Do Insurers Wrongfully Refuse to Defend?
Misinterpreting or misapplying policy language
Narrowly construing exclusions
Denying defense while still investigating the claim
Incorrectly claiming the suit falls outside the coverage period or terms
Conflict of interest concerns without offering alternative counsel
We investigate these decisions, scrutinize policy terms, and assess the full legal and financial impact of their decision.
What You Can Recover in a Failure to Defend Case
Costs of hiring your own legal defense
Settlement amounts or judgments paid out-of-pocket
Attorney’s fees
Consequential damages from business interruption or reputational harm
Punitive damages in cases of willful bad faith
Our goal is to recover what you lost—and ensure your rights as a policyholder are enforced.
Why GPJ Legal?
✔ Experience from Both Sides of the Policy
We’ve litigated these issues for both insurers and insureds. That perspective allows us to build sharper, stronger cases.
✔ Decades of Insurance Litigation Focus
Failure to defend cases often turn on interpretation, timing, and intent. We know what to look for—and what courts expect.
✔ Trial-Ready Advocacy
When insurers refuse to do what’s right, we’re ready to hold them accountable in court.
What does “failure to defend” mean in insurance?
Insurers must defend you whenever a lawsuit contains any allegation that might be covered under your policy. The duty to defend is broader than the duty to pay damages, meaning the insurer must step in even if only part of the case is covered.
When is an insurance company required to defend me?
Insurers must defend you whenever a lawsuit contains any allegation that might be covered under your policy. The duty to defend is broader than the duty to pay damages, meaning the insurer must step in even if only part of the case is covered.
What happens if my insurer refuses to defend me?
If your insurer wrongfully refuses, you can sue for breach of contract and bad faith. You may recover your legal expenses, settlements, or judgments paid out of pocket. GPJ Legal represents New Mexico policyholders in failure-to-defend claims and helps recover these costs.
What is a “reservation of rights” letter?
A reservation of rights letter means the insurer will provide a defense but reserves the right to later deny coverage. It’s legal, but you should have the letter reviewed to ensure your rights aren’t limited.
Can my insurer stop defending me during the case?
Not without a valid reason. Once the duty to defend is triggered, the insurer must continue until a court determines there’s no potential for coverage. Premature withdrawal can lead to bad faith liability.
What damages can I recover for failure to defend?
You can recover all reasonable defense costs, attorney’s fees, and any settlement or judgment the insurer should have covered. In cases of bad faith, additional damages or punitive awards may apply.
Is failure to defend common in New Mexico?
It’s uncommon but serious when it happens. Insurers who wrongfully deny defense obligations risk significant legal exposure and reputational harm. Courts take this breach very seriously.
What’s the difference between defending and indemnifying?
Defending means paying for your legal defense. Indemnifying means paying for the outcome - like a settlement or judgment. The duty to defend starts first and is broader under New Mexico law.
What can I do if my insurer won’t provide a defense?
Hire your own attorney to protect yourself and keep records of all expenses. You can later seek reimbursement once the insurer’s breach is proven.
When should I call a lawyer about failure to defend?
Immediately after receiving a denial or delay. GPJ Legal can review your policy, determine whether the insurer’s decision violates New Mexico law, and fight to recover your defense costs.
