A liability insurer’s duty to defend its insured is triggered by the allegations in the complaint. You probably already know this from reading a number of other articles on an insurer’s duty to defend. A recent federal district court opinion out of the Southern District of Florida in Philadelphia Indemnity Insurance Company v. Florida Memorial University, 2018 WL 1737641, *3 (S.D.Fla. 2018), contains a concise discussion, supported by applicable case law, on this point I find worthy of recitation:
In Florida, in determining an insurer’s duty to defend, a court must look no further than “the allegations contained within the four corners of the complaint in the underlying action against the insured.” Philadelphia Indem. Ins. Co. v. Yachtman’s Inn Condo Ass’n, Inc., 595 F.Supp.2d 1319, 1322 (S.D. Fla. 2009) (King, J.); Auto Owners Ins. Co. v. Travelers Cas. & Sur. Co., 227 F.Supp.2d 1248, 1258 (M.D. Fla. 2002) (even where “ ‘actual facts’ developed in the discovery process or otherwise show that there is potential coverage under the insurance policy, the duty to defend is still not triggered”); Chicago Title Ins. Co. v. CV Reit, Inc., 588 So.2d 1075, 1076 (Fla. 4th DCA 1991) (“conclusions drawn by the insured based upon a theory of liability which has not been pled” do not trigger coverage).
On the other hand, “[w]here the complaint against the insured alleges any facts which actually, or even potentially, fall within the scope of coverage under the policy, the insurer is obligated to defend the entire suit.” Yachtman’s Inn, 595 F.Supp.2d at 1322. Conversely, “an insurer is relieved of its duty to defend if the alleged facts and legal theories do not fall within a policy’s coverage.” Wackenhut Servs., Inc. v. Nat’l Union Fire Ins. Co. of Pittsburgh, Pennsylvania, 15 F.Supp.2d 1314, 1321 (S.D. Fla. 1998) (King, J.). Also, because “the duty to defend is much broader than the duty to indemnify,” “a court’s determination that the insurer has no duty to defend requires a finding that there is no duty to indemnify.” Yachtman’s Inn, 595 F.Supp.2d at 1322.
If you are dealing with an issue with your liability insurer where your insurer refuses to defend you in an underlying suit, make sure you consult counsel to best preserve your rights moving forward. This may include requesting the plaintiff amend allegations in its lawsuit, it may require initiating an action for declaratory relief, or it may result in you considering whether to utilize a Coblentz agreement.
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