Nevada Supreme Court: Insured has Burden to Prove Exception to Exclusion and May Use Extrinsic Evidence in Doing So; Clarifies that Insurer Cannot Use Extrinsic Evidence to Deny Duty to Defend

 

By: Gina Foran

The Nevada Supreme Court answered two certified questions from the Ninth Circuit: (1) Under Nevada law, does the insured or the insurer have the burden of proving an exception to an exclusion under a policy; and (2) may that party with the burden of proof rely on extrinsic evidence to prove the exception to the exclusion?

The court held that the insured has the burden of proving an exception to an exclusion, aligning with other states such as California and relying on settled Nevada law that the insured has the burden to establish coverage under a policy.

With respect to the second certified question, the court held that an insured may rely on extrinsic evidence when proving that an exception to an exclusion applies. The court limited this use of extrinsic evidence to those facts available at the time a claim was tendered to the insurer, or when the duty to defend arose.

However, in answering these certified questions, the court stated in a footnote that it was taking the “opportunity to clarify that the insured, but not the insurer, is allowed to introduce extrinsic evidence at the duty-to-defend stage.” Citing to a prior decision, Century Sur. Co. v. Andrew, 134 Nev. 819 (2018), and to Washington case law, the court stated that an insurer is permitted to use extrinsic evidence only to trigger the duty to defend, but not to deny it.

See Zurich Am. Ins. Co., et al. v. Ironshore Specialty Ins. Co.