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Principles of Insurance Law and Regulation

RLLI Section 45

1. Bart sexually abuses his pre-teen stepdaughter on several dozen occasions while at his house. He is finally caught by police in the middle of a sexual act. The step-daughter sues Bart for battery and related torts. Bart seeks coverage under his homeowner's policy. For reasons that need not concern us, the insurer agrees that its policy requires it to pay to for a defense but argues that those provisions are unlawful. It thus files a declaratory judgment action seeking to be relieved of any otherwise existing duty to defend? What result under the Restatement? What result under your conception of justice?

2. The Restatement argues that insureds will just get coverage for defense costs from offshore insurers so there would be little point in banning such insurance. Do you think this happens a lot? How often does the RLLI take the position that some practice should be accepted because insurers can bypass prohibitions through purchase of offshore insurance?