In Kentucky, the duty to defend a policyholder is separate and distinct from an obligation to pay a claim. James Graham Brown Found., Inc. v. St. Paul Fire & Marine Ins. Co., 814 S.W.2d 273, 280 (Ky. 1991). An insurer has a duty to defend if there is an allegation that potentially, possibly or might come within the coverage terms of the policy. Aetna Cas. & Sur. Co., 179 S.W.3d at 841 (citation omitted).
The determination of whether a defense is required must be made at the outset of the litigation by reference to the complaint and known facts. Lenning v. Commercial Union Ins. Co., 260 F.3d 574, 581 (6th Cir. 2001)(applying Kentucky law)(citing Brown Found., 814 S.W.2d at 279).
Know your rights against an insurance company when it comes to policy disputes. Call us if you receive a reservation of rights letter identifying a coverage dispute. 859-781-4556.