A recent decision by the United States Court of Appeals for the Ninth Circuit has clarified the responsibilities of insurers when it comes to defending their policyholders. On February 20, 2026, the court ruled that Atlantic Specialty Insurance Company must defend TriQuint Semiconductor in a lawsuit linked to chemical exposure at one of its facilities. This reversed an earlier ruling that had allowed the insurer to avoid that duty.
The case started when Pedro Domion, an employee of TriQuint, along with his wife and their young child, sued the company. They claimed that Pedro’s exposure to chemicals at work caused birth defects in their child. One of TriQuint’s insurers, Liberty Northwest Insurance Corporation, took on the defense. Atlantic Specialty, which also insured TriQuint, refused to defend the company. Liberty Northwest then sued Atlantic Specialty to recover the costs of the defense it had been forced to provide alone.
The lower court initially sided with Atlantic Specialty, letting it off the hook. However, the Ninth Circuit disagreed. The appeals court applied Oregon law, which requires that any doubts about coverage be resolved in favor of the insured. This means an insurer can only refuse to defend if the policy clearly excludes the claim. Atlantic Specialty tried to use three exclusions to dodge the obligation, but the court found problems with each one.
First, Atlantic Specialty cited its Employer’s Liability Exclusion, which excludes claims for injury to an employee’s family resulting from injury to the employee. But the court noted the complaint didn’t clearly say whether Pedro himself was injured or if chemicals were simply brought home. The complaint mentioned poor ventilation and lack of protective gear, suggesting that the child might have been exposed without Pedro being harmed directly. This uncertainty meant the exclusion couldn’t apply cleanly.
Second, Atlantic Specialty pointed to a Pollution Exclusion covering injuries from pollutants leaking or escaping. The court rejected this because the complaint described chemical exposure inside TriQuint’s facility—not pollution escaping into the environment.
The third exclusion involved electromagnetic radiation. Since the lawsuit concerned chemical exposure and made no mention of radiation, the court quickly dismissed this point.
Under Oregon law, even if part of a complaint falls outside coverage, as long as there is at least one covered claim, the insurer must defend. The Ninth Circuit sent the case back to the district court with instructions to side with Liberty Northwest on coverage. The remaining issues, including damages, will be handled later.
This ruling reinforces a clear standard for insurers: exclusions must be clear and leave no doubt if they are to avoid defending policyholders. If an exclusion is ambiguous, the insurer must stand by its insured. For anyone working in insurance, this decision highlights the importance of carefully drafting and interpreting policy language.