Texas Supreme Court Hears Argument on Whether to Adopt Exception to Eight-Corner Rule

At oral argument in the case of State Farm Lloyds v. Janet Richards,[1] the Texas Supreme Court heard from both sides on whether or not Texas courts should recognize a policy-language based exception to the eight-corners rule, applied when evaluating whether an insurer can introduce extrinsic evidence to contest its duty to defend the insured for a third-party liability claim. The so-called eight-corners rule allows a court to refer only to the relevant policy terms and factual allegations in the
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Texas Supreme Court Asked to Decide if Texas Recognizes Limited Exception to Eight-Corners Rule

In State Farm Lloyds v. Richards, the federal appellate court asked the Texas Supreme Court to decide whether Texas law recognizes a limited exception to the so-called eight-corners rule applied when evaluating an insurer’s duty to defend its insured for a third-party liability claim.[1] Under the eight-corners rule (referred to as the four corners rule in some jurisdictions), an insurer’s duty to defend is measured by the allegations of the complaint and the language of the policy.  Evidence outside of
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