Coverage B in the CGL policy can provide potential coverage for employers.
In the leading Coverage B case, Thompson v. Maryland Cas. Co., 84 P.3d 496, 502-03 (Colo. 2004), the Colorado Supreme Court identified two stages of coverage analysis. The first step to identify the tort claims expressly covered by the insurance policy. “Next, we refer to our?case law to determine the elements of the covered claims.”
If all the elements of the covered tort are factually alleged, the insurer has a duty to defend the case, even if the underlying complaint does not expressly allege the tort. “When all the elements of a claim covered by the policy are alleged, an insurer has a duty to defend its insured, even if a claim is not labeled according to the terms used in an insurance policy.” Id. at 502.
The requirement that the underlying tort claims satisfy the elements of Colorado law (rather than the understanding of lay people based upon the policy language) is consistent with the insured’s reasonable expectations. “When parties agree under the terms of an insurance policy that an insurer will defend its insured against specified causes of action, the reasonable expectation of the parties is that the insurer will defend its insured only against specific legal claims as they are defined by the law of the applicable jurisdiction.” Id. at 503 n.7, citing Lextron, Inc. v. Travelers Cas. and Sur. Co. of America, 267 F.Supp.2d 1041, 1047 (D. Colo. 2003)?(court first looks to the elements of the covered claims of defamation and invasion of privacy under the law of the relevant jurisdiction, to determine whether the insurer's duty to defend was triggered by facts alleged in the pleadings); QSP, Inc. v. Aetna Cas. and Sur. Co., 773 A.2d 906, 918-19 (Conn. 2001)?(court's first step in analyzing insurer's duty to defend against claim of malicious prosecution is to consider elements of the claim under applicable Connecticut case law).
For further analysis of CGL Coverage B from a national perspective, see Weimer et al., CGL Policy Handbook, Third Edition, Chapters 9 and 10 (Wolters Kluwer).
Brit Weimer is an insurance coverage and defense attorney practicing with Weimer & Weeding in Colorado, Minnesota and Wisconsin.
