It is a long-held axiom that an insurer's duty to defend is broader than the duty to indemnify. But what encompasses that duty? On what is the duty based: the factual allegations in the complaint, or legal theories of recovery such as negligence? Can other evidence or facts not in the complaint be considered? What if the complaint includes other allegations obviously not covered by the policy?
Further, when does the duty to defend end? What happens when an insurer determines it has no duty to defend only to later learn there was such a duty? A recent ruling by the New York Court of Appeals seems to challenge the rules generally applied in most jurisdictions. At this point, it is debatable as to whether the decision will be a game-changer for insurers. For now, let's review the typical policy language detailing the insurer's duty to defend an insured.
Typical Policy Language
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