The Texas Supreme Court Clarifies the “Eight Corners Rule”

In BITCO General Insurance Corp. v. Monroe Guaranty Insurance Co., the Texas Supreme Court recently announced a new rule that applies to insurance coverage disputes and an insurer’s duty to defend. The Court’s ruling allowed for extrinsic evidence to be used in a dispute about the duty to defend, provided that it met certain strict conditions. The rule applied by the Court is known as the “eight corners rule” because it allows a court to look beyond the four corners of the legal complaint against the policyholder and the four corners of the insurance policy at the center of the dispute. This case provided important clarifications about the use of the “eight corners rule.”

 

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