ABSTRACT
In the UK, liability insurance commonly covers the cost of the insured's defending a claim, but it may well limit the cover to costs incurred with the consent of the insurer; and the insurer may defend a claim under the policy for costs on the ground of absence of consent. As regards other costs, notably costs incurred to prevent loss, a preliminary point is whether policyholders are required to mitigate loss at all. Conflicts between insurer and insured may arise in a number of ways. Regulation 5 requires insurers to put in place at least one of three specified arrangements designed to avoid conflicting interests with parts of its own business concerned with other classes of insurance. To avoid doubt and to preserve its position, the insurer may wish to follow the practice found in Canada and the USA of proceeding with the defence on the basis of a "non-waiver" agreement with the insured.
