Hunton Insurance Recovery Blog

In ExxonMobil Corp. v. Natl. Union Fire Ins. Co. of Pittsburgh, PA, the Texas Supreme Court held that an insurance policy did not incorporate the payout limits of an underlying service agreement and thus the insured was entitled to the higher limits under the insurance policy. 2023 WL 2939596, at *1 (Tex. Apr. 14, 2023).

In First Mercury Insurance Co. v. First Florida Building Corp., et al., a federal district court ordered that an insurer had a duty to defend its insured against an underlying personal injury lawsuit. 2023 WL 23116, at *1 (M.D. Fla. Jan. 3, 2023). First Mercury is a cautionary tale about how insurers may try to circumvent their obligations by improperly considering extrinsic evidence when determining whether they have a duty to defend their insureds.

Texas is among the minority of states that permit few, if any, deviations from the “eight-corners rule,” which provides that an insurer’s duty to defend must be determined from the complaint and the policy, without regard to extrinsic evidence or facts. In Bitco Gen. Ins. Corp. v. Monroe Guar. Ins. Co., No. 19-51012, 2022 WL 1090800 (5th Cir. Apr. 12, 2022) (“Bitco”), the Fifth Circuit Court of Appeals declined to consider extrinsic evidence in determining Bitco’s duty to defend and outlined when a court applying Texas law can deviate from the state’s strict eight-corners rule under the Monroe exception.