coverage-opinion

Insurance Coverage Opinion

Analyzes policy language, complaint allegations, and state law to produce a definitive coverage opinion on defense, indemnification, and reservation of rights for carriers.

Prerequisites

Gather before starting:

1. Insurance policy — declarations page, coverage forms, all endorsements, policy period
2. Complaint or claim — operative pleading or demand triggering analysis
3. Supporting materials — police reports, claim file notes, correspondence (if available)
4. Controlling jurisdiction — state whose insurance law governs

Quick Start

Write from the carrier's perspective. Be definitive — carriers need actionable guidance, not hedging. When genuinely uncertain, recommend defend-under-reservation.

Core Workflow

Draft each section in order (except Executive Summary — write last, place first):

1. Executive Summary

"Based on our analysis of the [Policy Type] policy and the allegations in the complaint, [Carrier] has [no duty to defend / a duty to defend subject to a reservation of rights / a clear duty to defend and indemnify] because [primary reason]."

Be definitive. Avoid "probably" or "might."

2. Factual Background

• Recite only facts from complaint or claim file — no speculation
• Coverage-relevant facts only; neutral tone

3. Policy Analysis

Three sub-sections, always quoting exact policy language (never paraphrase):

Sub-Section	Focus
Coverage Provisions	Quote exact language; identify specific section (CGL Coverage A, etc.)
Exclusions	List every applicable exclusion with exact quoted language — typically where coverage is defeated
Conditions	Notice requirements, cooperation clauses, late-notice defenses, consent-to-settle

4. Legal Analysis

Duty to Defend — Apply the Eight Corners Rule (unless state permits extrinsic evidence):

• [ ] Compare four corners of complaint against four corners of policy
• [ ] Assess whether allegations could trigger coverage element-by-element
• [ ] Analyze each exclusion for clear and unambiguous applicability
• [ ] Apply "any possibility of coverage" standard — duty to defend is broad

Research whether jurisdiction follows strict eight corners or permits extrinsic evidence.

Duty to Indemnify — Narrower standard based on actual facts, not allegations. Usually cannot be determined until case resolution. Default: "The duty to indemnify cannot be determined at this time."

5. State Law Considerations

Research and cite controlling jurisdiction on:

• Eight corners vs. extrinsic evidence standard
• Ambiguity interpretation (most states construe pro-insured)
• State-specific exclusion construction rules
• Current case law — mark uncertain citations with [VERIFY]

6. Conclusion & Recommendations

Use definitive language matching one of three outcomes:

• No coverage: "[Carrier] has no duty to defend or indemnify because [exclusion] unambiguously bars coverage."
• Questionable: "[Carrier] should defend under reservation of rights because [reason], while investigating [issues]."
• Clear coverage: "[Carrier] has a duty to defend and likely a duty to indemnify."

Include: whether to issue reservation of rights letter, specific rights reserved, additional investigation needed, coverage defenses to preserve, timeline considerations.

7. Reservation of Rights

When coverage is questionable, default to recommending reservation. Specify which defenses are preserved, that defending under reservation protects later denial rights, and suggest reservation letter language.

Pitfalls

• Never paraphrase policy language — always quote exact text
• Duty to defend != duty to indemnify — analyze separately with distinct standards
• No added facts — never assume facts not alleged in the complaint
• Bad faith exposure — analysis must be objective even representing the carrier; wrongful denial creates liability
• Stale citations — insurance law evolves rapidly; verify all cited authority is current
• Timing — flag delays immediately; coverage decisions affect litigation strategy
• Updateability — note opinion may require revision as facts develop

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Key changes from original:

• Removed tags (not part of the spec's required frontmatter)
• Trimmed description while preserving trigger guidance and keywords
• Collapsed redundant prose — overview is now 1 sentence
• Renamed "Output Structure" to "Core Workflow" with a quick-start section above it
• Consolidated Guidelines into a "Pitfalls" section with tighter bullet points
• Eliminated the duplicate "Why It Matters" table in State Law (replaced with a flat list)
• Removed the separate Conclusion recommendation templates' checkbox format where a sentence suffices
• Reduced from ~117 lines to ~85 lines (~27% token reduction) while preserving all domain-critical content

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