Under the so-called “in for one, in for all” rule, if there is one covered claim on a multi-count complaint while other claims are not covered, the insurer is required to defend the entire action. Recently, the US Court of Appeals for the Third Circuit in Lupu v. Lone City, LLC, 903 F.3d 382 (3rd Cir. 2018) (interpreting Pennsylvania law) held that a title insurer was entitled to limit its duty to defend only to covered claims. The court found that title insurance policies differed from general liability policies because title insurance policies are limited to loss from defects that cloud or invalidate a title. Because title insurers cover past defects in title, title insurers were entitled to limit their risk by searching the public records before issuing a policy. This was different than general liability insurance which typically provided insurance against future events. Additionally, general liability insurance companies typically promise to defend “a suit” or “any suit” seeking damages for covered acts or omissions. In contrast, title insurers promise to defend only claims arising from defects in title.
The title insurance policy in question expressly disclaimed a duty to defend non-covered claims. The Circuit Court held that the disclaimer did not violate Pennsylvania public policy. In doing so, the Court noted that other courts that had supported the “in for one, in for all” rule, reasoned that the rationale for the rule – that it was not feasible to parse multiple complaints – did not apply to title insurance. According to the Court, title issues could easily be separated from related claims.