A typical Commercial General Liability (CGL) insurance policy includes two duties: (1) the duty to defend; and (2) the duty to indemnify. The duty to defend, when triggered, obligates the insurer to provide the insured legal counsel to represent them and to defend them from claims, including claims that may ultimately prove to invalid, or outside the scope of the policy. The duty to indemnify, when triggered, obligates the insurer to pay any costs or damages the insured must pay if the claim is upheld. It has been uniformly held that the policy covenant to defend is ‚ separate from and broader than the covenant to indemnify. See Continental Casualty Co. v. Rapid-American Corp., 80 N.Y.2d 640, 648, 593 N.Y.S.2d 966, 969 (1993); Burroughs Wellcome Co., v. Commercial Union Ins. Co., 632 F. Supp. 1213, 1218 (S.D.N.Y 1986) As a result, New York courts have generally held that an insurance company has an obligation to defend a claim against its insured unless it can establish ‚ as a matter of law, that there is no possible factual or legal basis on which the insurer might eventually be obligated to indemnify him under any provision contained in the policy. Villa Charlotte Bronte, Inc. v. Commercial Union Ins. Co., 65 N.Y.2d 846 (1985) Moreover, an insurance company cannot simply avoid its duty to defend its insured by claiming that any damages its insured may be entitled to would fall outside the policy coverage. For instance, if pollution exclusions operate to relieve an insurer of its duty to indemnify, but the applicability of the exclusions cannot be determined until after a court ruling, the insurer is still obligated to defend its insured against the underlying complaint. In contrast, an insurer has no obligation to defend its insured against complaints, where, as a matter of law, there is can be no possibility of coverage under the express terms of the policy.
It is well established in New York that an insurer’s duty to defend its insured is determined by the allegations contained within the four corners of the complaint. Provided that the allegations contained within the four corners of the complaint can be rationally said to fall within the policy’s coverage, an insurer has an irrefutable duty to defend its insured. Since an insurer’s duty to defend its insured is contractual, in the event a dispute arises in connection with the insurer’s duty to defend, New York courts look to the language of the insurance policy to decide whether the insurer has a legal duty to defend its insured.