On October 28, 2021, the Nevada Supreme Court joined 26 other
state supreme courts, holding the insured has the burden to prove
an exception to an exclusion. The question before the court was if
an insurance policy provides coverage, but that coverage is then
modified by an exclusion, who has the burden to demonstrate an
exception to the exclusion? Can an insured use extrinsic evidence
to meet that burden? These issues routinely arise in coverage
disputes.
The underlying action arose from Nevada's construction defect
litigation and concerned whether there was a duty to defend. Nevada
adopted the majority rule that since the insured bears the initial
burden of establishing coverage, the insured also should bear the
burden of proving an exception to an exclusion applies. The court
also concluded that the insured may rely on extrinsic evidence
because "the duty to defend must be determined at the outset
of litigation based upon the complaint and any other facts
available to the insurer" at the time the insured tendered the
defense.
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