Many people think of insurance for covering something you own when it is damaged, such as your home or auto. Or, people thing if health insurance and life insurance. But there is another type of insurance that is important to all of us. That is liability insurance. This is the insurance that is suppose to protect you when someone sues you for something they allege you did wrong.
Under Texas law, the duty to defend depends on the language of the policy setting out the contractual agreement between insurer and insured. Whether an insurer has a duty to defend its insured is a question of law. An insurer must defend its insured if a plaintiff ’s factual allegations potentially support a covered claim, while the facts actually established in the underlying suit determine whether the insurer must indemnify its insured. Thus, an insurer may have a duty to defend but, eventually, no obligation to indemnify. The initial burden is placed on the insured to demonstrate that coverage exists considering only the policies and the underlying lawsuit papers. The burden then shifts to the carrier to establish that one or more of the policy exclusions apply to negate any otherwise-applicable duty to defend. Courts consider the factual allegations without regard to their truth or falsity, and resolve all doubts regarding the duty to defend in favor of the insured. Further, in making the determination, courts look to the factual allegations showing the origin of the damages claimed, not the legal theories or conclusions alleged. If the petition asserts one claim that could potentially be covered by the insurance policy, the insurer must defend the entire suit. The duty to defend is a sprawling topic on which Texas law and the Restatement of Insurance agree on many issues. For example, it is well settled that an insurer’s right to conduct the defense includes the authority to select the attorney who will defend the claim and to make other decisions that would normally be vested in the insured as the named party in the case. Likewise, the Restatement outlines the scope of an insurer’s right to control the defense as follows: