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As soon as a claim or lawsuit is asserted against a professional, she should give notice to her insurer. The insurer has three choices following notice. It may accept coverage and appoint counsel to defend the action without asserting any potential defenses. It may disclaim coverage if it believes it will be able to establish as a matter of law that there is no possible factual or legal basis on which it might be obligated to indemnify its insured. In that instance, it will refuse to defend the insured. If it wrongfully refuses to defend, it will ultimately be able to only "litigate the validity of its disclaimer."1 Finally, the insurer can reserve its rights to disclaim coverage at some future date. It must notify the insured of its reasons for reserving its rights and will appoint defense counsel. Depending upon the reservation of rights, the insured may decline appointed counsel and instead retain outside counsel whose reasonable fees must be paid by the insurer.

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