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The New York Court of Appeals’ recent decision in K2 Investment Group, LLC, et al. v American Guarantee & Liability Insurance Company may—or may not—be a game changer. Under New York law, the duty to defend is exceedingly broad. If the complaint contains any facts or allegations that bring the claim potentially within the policy, then the insurer must defend. The duty to defend arises when the allegations within the four corners of the complaint potentially give rise to a covered claim, or where the insurer has knowledge of facts establishing a reasonable possibility of coverage. Even if a purportedly covered claim is frivolous or groundless, the allegations still trigger the duty to defend.


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