No-Action Clause Defense to a Subrogation Claim
The no-action clause defense to a subrogation claim asserted by a concurrent insurer has been addressed by one Texas court in Liberty Mut. Ins. Co. v. General Ins. Corp., 517 S.W.2d 791, 798 (Tex. Civ. App.--Tyler 1974, writ ref'd n.r.e.).
In that case, demand was made on one of the concurrent insurers, Liberty, to contribute one-half of any settlement to the extent of its limits, but Liberty refused to make any contribution. See id. at 793.
Liberty argued that the other insurer was not entitled to recover against it because the no action clause was breached. See id. at 798.
The court concluded:
"It seems now to be the rule that an insurance company may ordinarily insist upon compliance with the no action clause for its own protection, but it may not do so after it is given the opportunity to defend the suit or to agree to a reasonable settlement and refuses to do either claiming erroneously that it has no responsibility." Id. at 798.