Bishop involves the reversal of a summary judgment entered in favor of an insurer
as to a "coverage by estoppel" claim. "When an insurance
company assumes the defense of an action, with knowledge, actual or presumed,
of facts which would have permitted it to deny coverage, it may be estopped
from subsequently raising the defense of non-coverage." The coverage
by estoppel claim requires a representation of material fact, reasonable
reliance and a detrimental change in position as a result of the reliance.
Prejudice and whether reliance was reasonable are questions for the jury.
The trial court entered summary judgment against a business owner who
argued that his insurer made statements and undertook actions which led
the business owner to believe she had insurance coverage for the underlying
claim, despite the insurer's knowledge of facts which would have permitted
it to deny coverage. The First District reversed, noting that the coverage
by estoppel claim exists, it does not sound in bad faith, and many of
the relevant questions were to be determined by the jury.