Insurance Update

The duty to defend takes center stage in this month’s Insurance Update, and particularly, when extrinsic evidence may be considered in assessing that duty.

As it’s back to school time (whether virtually or in person), we thought we’d begin with a short quiz.

Which of the following circumstances gives rise to an insurer’s duty to defend? (Choose all that apply):

a. In a “four corners” state, the claimant amends her complaint to omit facts that had placed the claim within the terms of an exclusion.

b. In an “eight corners” state, the complaint omits or misstates facts concerning the location of an ATV accident and the victim’s residence. Other information, such as a vehicle crash report, court order, and an admission of the insured, shows that an exclusion applies.

c. In a state allowing for the consideration of extrinsic evidence, the insured is charged with stealing construction materials. In a declaratory judgment action on coverage, the insured asserts for the first time that the materials were taken by mistake.

Hint: The insurer was found to have a duty to defend in one of the above situations. To see which one, check out the first three case summaries in our update.

Speaking of quizzes, or perhaps more apropos, tutoring, the New Jersey Supreme Court was asked on certified question by the Third Circuit, whether the “made-whole” doctrine (that an insurer cannot assert subrogation rights until the policyholder has been fully compensated) applies to first-dollar risk allocated to an insured.

Other cases in this month’s update address whether there is coverage for trademark infringement claims, constructive fraud, human trafficking and wage violations, and false reporting of lab results.

We hope that you find these cases instructive.

Keep those pencils sharp.

Rob Tugander and Greg Mann