A homeowner's insurer sought a declaratory judgment as to whether or not it owed a duty to defend and/or indemnify him with respect to a pending libel action. He was named in a lawsuit brought by a public official, a candidate for office, who alleged that the insured libeled or defamed him.

The aggrieved party claimed damages for extreme mental anguish and emotional distress caused by publication of a letter by the insured that was critical of the candidate. The insurer appealed a trial court judgment holding that the liability coverage included in its homeowners policy was applicable.

The appeal court cited American States Insurance Company v. Cooper, 518 So.2d 708 (Ala. 1987). Therein, it was held that mental anguish was covered as "bodily injury" under standard homeowners policy liability coverage insuring agreements.

The court noted that "a public official can recover for libel only by showing that false statements were published by the defendant either with the knowledge of their falsity or with reckless disregard of whether they were false or not." The official in this case alleged precisely that the insured published the statements "with reckless or gross disregard as to whether such statements were true or false." (There was no evidence that the claimed injury was intentional on the part of the insured.)

Stating that "an insurance company's duty to defend its insured is determined by the language of the insurance policy and by the allegations in the complaint giving rise to the suit against the insured," the court affirmed the judgment of the trial court in favor of the insured and against the insurer.

(ALFA MUTUAL INSURANCE COMPANY, INC., Plaintiff-Appellant v. MORRISON ET AL., Defendants-Appellees. Alabama Supreme Court. No. 1911651. February 5, 1993. CCH 1993 Fire and Casualty Cases, Paragraph 4199.)