Coverage Opinion

Purpose: Analyze whether there is insurance coverage, the duty to defend, or whether there should be a reservation of rights and be able to provide that coverage opinion to the carriers alleged insured.

Understanding Your Assignment First, understand what you're being asked to do: The carrier gets sued or receives a claim They need to know: "Do we have to defend this case?" and "Do we have to pay if there's a judgment?" Duty to Defend vs. Duty to Indemnify - these are separate analyses, and duty to defend is much broader The carrier makes business decisions based on your opinion - reservation of rights, coverage denial, settlement authority Remember: You represent the carrier, not the insured. Your analysis protects the carrier's interests.

Step 1: Gather Your Materials Never start writing until you have: The insurance policy (all relevant pages - declarations, coverage forms, endorsements) The complaint or claim documents Any additional factual materials (police reports, claim files, etc.) Relevant state law on insurance coverage (this varies significantly by jurisdiction) Pro tip: Print everything out. You'll be cross-referencing constantly.

Step 2: Structure Your Opinion A. Executive Summary Write this LAST, but put it first. One paragraph maximum: "Based on our analysis of the [Policy Type] policy and the allegations in the complaint, [Carrier] has [no duty to defend/a duty to defend subject to a reservation of rights/a clear duty to defend and indemnify] because [primary reason]." B. Factual Background Stick to facts alleged in the complaint or established in the claim file Don't speculate or add your own interpretation Focus on facts relevant to coverage - don't retell the entire story Be neutral in tone - you're not advocating for either side yet C. Policy Analysis This is the meat of your opinion. Break it down systematically:

1. Applicable Coverage Provisions Quote the exact policy language - never paraphrase Identify the specific coverage section that might apply (CGL Coverage A, Professional Liability, etc.)
2. Exclusions Analysis List every potentially applicable exclusion Quote the exact exclusion language This is usually where coverage is defeated
3. Conditions and Other Provisions Notice requirements, cooperation clauses, etc. Often overlooked but can be coverage killers

Step 3: Legal Analysis - The Critical Part Duty to Defend Analysis Remember the "Eight Corners Rule" (in most states): Look only at the four corners of the complaint and the four corners of the policy Don't look at external evidence (unless state law allows it) The duty to defend is triggered if there's any possibility of coverage "When in doubt, defend" - the standard heavily favors finding a duty to defend Your analysis should be: Element by Element: Does the complaint allege facts that could trigger coverage under each element? Exclusion by Exclusion: Does any exclusion clearly and unambiguously bar coverage? Duty to Indemnify Analysis This is narrower - based on actual facts, not just allegations Usually can't be determined until the case is resolved Often you'll conclude: "The duty to indemnify cannot be determined at this time"

Step 4: State Law Considerations This is where junior attorneys often screw up: Insurance law varies dramatically by state Research the controlling jurisdiction's rules on: Eight corners rule vs. extrinsic evidence Ambiguity interpretation (pro-insured in most states) Specific coverage interpretations Cite recent cases - this area of law moves quickly

Step 5: Writing Tips Tone and Style: Objective and analytical - you're not advocating, you're analyzing Clear and concise - claims adjusters will read this, not just lawyers Definitive when possible - "The policy does not provide coverage" vs. "It appears coverage may not be available" Common Phrases to Use: "Based on the allegations in the complaint..." "The policy language unambiguously states..." "Under [State] law, exclusions are interpreted narrowly..." "The duty to defend is broader than the duty to indemnify..." What to Avoid: Never say "probably" or "might" - be definitive Don't advocate for the insured against your client Don't ignore unfavorable authority Don't add facts not in the complaint

Step 6: Conclusion and Recommendations Be crystal clear about your conclusions: If No Coverage: "[Carrier] has no duty to defend or indemnify this action because [exclusion] unambiguously bars coverage for the alleged conduct." If Questionable Coverage: "[Carrier] should defend under a reservation of rights because [reason], while simultaneously investigating [specific coverage issues]." If Clear Coverage: "[Carrier] has a duty to defend and likely a duty to indemnify based on the allegations." Always include practical recommendations: Should carrier send a reservation of rights letter? What additional investigation is needed? Are there coverage defenses to preserve? Timeline considerations?

Step 7: The Reservation of Rights Discussion When in doubt, recommend a reservation: Explain what specific rights the carrier is reserving Note that defending under a reservation protects the carrier's ability to later deny coverage Include language for the reservation letter if appropriate

Critical Mistakes to Avoid: Don't be a coverage advocate for the insured - you represent the carrier Don't ignore clear exclusion language because you feel bad for the insured Don't assume facts not alleged in the complaint Don't confuse duty to defend with duty to indemnify - they're different standards Don't cite outdated cases - insurance law evolves rapidly Don't hedge excessively - the carrier needs definitive guidance when possible

Final Practical Notes: Timing: Get these done quickly - coverage decisions affect litigation strategy If you need more time, communicate with the carrier immediately Follow-up: Expect questions from claims adjusters Be prepared to update your opinion as facts develop Keep detailed time records - carriers scrutinize coverage opinion bills Quality Control: Double-check all policy citations Verify you're analyzing the right policy period Remember: The carrier is relying on your legal judgment to make business decisions that could involve millions of dollars. Be thorough, be accurate, and be confident in your analysis. When you're genuinely unsure, it's better to recommend defending under a reservation of rights than to guess wrong about coverage. It must be objective because the carrier does not want to wrongfully deny coverage and the insured does not want to be wrongfully denied.