Section 13.65 Insurer’s Duty to Defend

• Library: Insurance Practice 2015

The duty to defend arises whenever there is a potential or possible liability to pay based on the facts at the outset of the case. The duty to defend is not dependent on the probable liability to pay based on the facts ascertained through trial; it is determined by comparing the language of the insurance policy with the allegations in the complaint. If the complaint merely alleges facts that give rise to a claim potentially within the policy’s coverage, the insurer has a duty to defend. See McCormack Baron Mgmt. Servs., Inc. v. Am. Guarantee & Liab. Ins. Co., 989 S.W.2d 168, 170–71 (Mo. banc 1999).

To determine the scope of an insurer’s duty to defend a third-party claim under a liability policy, it is necessary to consult the specific language of the insuring agreement involved. When the allegations of the plaintiff’s petition are arguably or potentially within the policy-stated coverage, the insurer must generally defend the suit. Mo. Terrazzo Co. v. Iowa Nat’l Mut. Ins. Co., 740 F.2d 647 (8^th Cir. 1984); Zipkin v. Freeman, 436 S.W.2d 753 (Mo. banc 1968). Conversely, if the plaintiff’s petition discloses facts that are not within the stated coverage of the policy, the insurer has no duty to defend the action. Hawkeye-Sec. Ins. Co. v. Iowa Nat’l Mut. Ins. Co., 567 S.W.2d 719 (Mo. App. W.D. 1978).

Readers should note that the specific allegations of the petition may not be controlling in determining the insurer’s duty to defend when facts known or that reasonably should be known to the insurer establish the existence or nonexistence of the duty to defend. Farm Bureau Town & Country Ins. Co. of Mo. v. Turnbo, 740 S.W.2d 232 (Mo. App. E.D. 1987).

But see Dickman Aviation Services, Inc. v. United States Fire Insurance Co., 809 S.W.2d 149 (Mo. App. S.D. 1991), in which a liability carrier declined coverage and defense based on an original petition presented to the insurer, but subsequently an amended petition was filed...