Insurance Defense and Coverage
Defense and Indemnity
While most states confine the defense analysis to the complaint and the policy, recognized exceptions permit consideration of extrinsic facts. The narrowest version, used in Texas, allows evidence going solely to coverage that does not overlap the merits.
Broader approaches permit consideration of any facts known to the insurer.
Alternative Names:
Extrinsic Evidence Rule, Outside Evidence Exception
Why it Matters?
The exception is what allows an insurer to deny a defense where the complaint pleads a covered claim that the actual facts contradict, such as an alleged accident the insurer knows was intentional. Its availability determines whether artful pleading can manufacture a defense obligation. Insurers in narrow-exception states are often obligated to defend claims they know to be uncovered until a declaratory judgment resolves the question.
Frequently Confused with
Related terms
Frequently asked questions
When may extrinsic evidence be considered?
Why does the exception matter?
