Duty to defend arises from the Claim (the Complaint)
An insurer’s broad duty to defend is well-settled in the State of New Jersey – it is triggered by the allegations contained in the complaint.
SL Industries, Inc. v. American Motorists Ins. Co., 128 N.J. 188 (1992) (the duty to defend is generally determined by comparing the allegations in the complaint with the language of the policy. When the two correspond, the insurer must defend the suit.);
Voorhees v. Preferred Mut. Ins. Co., 128 N.J. 165, 173, (1992) (an insurer’s duty to defend is determined by comparing the allegations in the complaint with the language of the policy);
Hartford Insurance Group v. Marson Construction Corp., 186 N.J. Super. 253, 257 (App. Div. 1982) certif. denied, 93 N.J. 247, 460 A.2d 656 (1983) (an “insurer’s obligation to defend is triggered by a complaint against the insured alleging a cause of action which may potentially come within the coverage of the policy, irrespective of whether it ultimately does come within the coverage and hence irrespective of whether the insurer is ultimately obliged to pay.”)
Jolley v. Marquess, 393 N.J. Super. 255, 273-274 (App. Div. 2007) (“[i]n determining whether plaintiff is entitled to a defense and indemnification, we compare the allegations of the complaint to the language contained in the policy because the duty to defend and indemnify “‘comes into being when the complaint states a claim constituting a risk insured against…
When the complaint and the language of the policy correspond, the insurer clearly must defend the suit” [citation omitted]. However, the duty to defend extends only to claims on which there would be a duty to indemnify in the event of a judgment adverse to the insured.” Hartford Accident & Indem. Co. v. Aetna Life & Casualty Ins. Co., 98 N.J. 18, 22 (1984).
Duty to Defend May Also Be Triggered by Information Obtained outside of complaint
In addition to searching the complaint to determine an insurer’s duty to defend and indemnify, the duty to defend can also be triggered by information obtained outside of the complaint. In SL Industries, Inc. v. American Motorists Ins. Co., supra, the Supreme Court of New Jersey concluded that “the duty to defend is triggered by facts [outside of the complaint] indicating potential coverage that arise during the resolution of the underlying dispute.
According to the Court, to “allow the insurance company ‘to construct a formal fortress of the third party’s pleadings and to retreat behind its walls, thereby successfully ignoring true but unpleaded facts within its knowledge that require it, under the insurance policy, to conduct the putative insured’s defense” would not be fair.” 128 N.J. at 198 (citation omitted); see also, Jolley v. Marquess, supra, at 271-272).