The Eight-Corners Rule: Determining Duty To Defend

In a recent opinion, the Fifth Circuit certified a question of law to the Texas Supreme Court having to do with the eight-corners rule.

The Case

A young boy perished in an ATV accident while in the care of his grandparents. When sued, they sought a defense under their homeowner’s policy. The insurance company subsequently sought declaratory judgment as to whether it had a duty to defend. The policy provided two exclusions. It excluded coverage for injury arising from ATV use while off the premises and for residents of the household under the age of 21.

To support its claim, the insurance company provided a crash report showing the accident did not occur on the premises and a court order demonstrating the grandparents had joint custody of the child. The grandparents argued that the evidence presented could not be considered under Texas’ eight-corners rule.

The Court faced a question of whether an insurance company could rely on extrinsic evidence to show it had no duty to defend the insured.

The Eight-Corners Rule

In resolving the scope of an insurer’s duty to defend in Texas, courts rely on the eight-corners rule, named for the four corners of the only two documents that are determinative. The petition and the policy control the analysis of whether an insurance company must defend its insured in a given situation. Anything outside of these two documents, including easily ascertainable facts like those in the case at hand, are not material under the eight-corners rule.

An Extrinsic Evidence Exception

The trial court allowed the extrinsic evidence and granted the insurance company’s motion for summary judgment. The Fifth Circuit recognized that although the Texas Supreme Court has recognized an extrinsic evidence exception to the eight-corners rule, it has not created precedent regarding such.

 The Takeaway

Currently, an exception to the eight-corners rule does not exist in Texas. Unless and until the law changes, counsel for insureds who are facing push back from their insurer will want to utilize the eight-corners rule in negotiations over obtaining coverage for their client’s defense.

Weitz Morgan serves as litigation counsel to general counsels, business owners, and government contractors throughout Texas and nationally. This article is basic in nature, for the purpose of general interest and education, and limited to the law of the State of Texas.