Shoshone First Bank v. Pacific Employers Insurance Co
In Shoshone First Bank v. Pacific Employers Insurance Co., 2 P.3d 510 (Wyo. 2000), some of the claims against the insured were covered and some were not. The insurance company sent a reservation-of-rights letter in which it said that it intended to allocate the costs of defending the non-covered claims to the insured. The Supreme Court of Wyoming held, unremarkably, that it would not allow allocation of costs. Id. at 514.
It concluded that it should follow the minority view, which is that an insurance company's duty to defend includes the obligation to defend non-covered claims when they are asserted together with covered claims. Id. at 515. The reservation-of-rights letter was ineffective to alter the contractual duty to defend. Id.