“Whether an insurance carrier has a duty to defend its insured in an underlying lawsuit is perhaps the most critical determination of a coverage investigation and can be a highly contested issue,” writes Goldberg Segalla’s Jason E. Rusche in an article for the American Bar Association’s Tort Trial and Insurance Practice Section’s (TIPS) Insurance Coverage Litigation Newsletter.
In the article, Jason, a member of Goldberg Segalla’s Global Insurance Services group based in Hartford, discusses the impact of a recent Connecticut Supreme Court decision, Nash St., LLC v. Main St. American Assurance Co., in determining the duty to defend. He also goes into depth about Connecticut’s “four corners” rule.
“The ‘four corners’ rule holds that a liability carrier’s duty to defend depends on the allegations asserted in the underlying complaint and, with limited exceptions, a carrier is prohibited from relying on evidence extrinsic to the four corners of the complaint to deny coverage,” Jason writes. “Accordingly, where the allegations of the complaint in the underlying lawsuit create some factual uncertainty and there is a reasonable possibility that indemnity coverage may ultimately be available to the insured, the carrier has a duty to defend the lawsuit.”
In Nash St., the Connecticut Supreme Court decided the court could expand a liability carrier’s duty to defend by extending it to certain situations where the allegations of an underlying complaint don’t create any factual uncertainty, but do create legal uncertainty.
“The scope of the court’s holding in Nash St. remains to be seen,” he writes. “Notably, however, the court expressly stated that the absence of controlling authority in and of itself does not constitute legal uncertainty. Moreover, the court did not address whether a single contrary decision constitutes legal uncertainty. By emphasizing the extensive litigation over the meaning of the Business Risk exclusions and characterizing the split of authority as ‘significant,’ the court indicated that it may not and the court may limit the reach of its holding in Nash St. in a future case.”
“Connecticut Decides Legal Uncertainty Triggers Duty to Defend,” ABA’s Tort Trial and Insurance Practice Insurance Coverage Litigation Newsletter, Winter 2021
Jason E. Rusche represents and counsels clients in insurance and reinsurance coverage matters and litigation as well as underlying personal injury and commercial litigation. Jason has extensive experience handling complex coverage disputes for insurers under a wide range of insurance policies and coverages (historical, admitted and non-admitted), including pollution and remediation liability, professional liability, commercial general liability, umbrella, excess, commercial property, builder’s risk, commercial auto, personal lines, and various specialty lines, including manuscripted policies. A seasoned litigator, Jason has a wealth of experience representing clients across numerous industries in environmental, mass tort, toxic tort, premises liability, professional liability, product defect, construction, and trucking litigation.