Can Speculation Fuel a Defense Obligation Under the Insurance Policy? The Montana Supreme Court Says That it Cannot.

On Behalf of | Sep 9, 2016 | Insurance Law

Recently the Montana Supreme Court held that a duty to defend cannot be based on pure speculation regarding unpleaded claims. In Fire Ins. Exchange v. Weitzel, 2016 MT 113, 371 P.3d 457 (Mont. 2016), the elder abuse complaint framed 19 causes of action all of which sought economic damages only. The trial court found that while the complaint contained no cause of action for false imprisonment, facts within the complaint supported such a claim including an allegation that the insured had changed the locks on the plaintiff’s house and told the plaintiff, an elderly individual, that he could not open the doors “for anyone.” As a result, the trial court found that the Estate potentially sought damages for false imprisonment even though there was no specific cause of action alleging false imprisonment by name. The Montana Supreme Court reverse, however. The High Court found that although a complaint does not expressly have to allege a covered cause of action in order to trigger a defense obligation, the complaint must at least contain facts that would support a covered claim. While the complaint in question contained multiple causes of action, all of the causes of action sounded in economic loss. There were no factual allegations that the insured had restrained the elderly person against his will or in any type of unlawful manner. Even the allegation that the locks had been changed and the elder victim had been told not to open the door for anyone did not suggest, according to the Court, that the insured had prevented the elder person from voluntarily leaving his home. The High Court refused the elder victim’s invitation to consider hypothetical facts in determining whether a duty to defend existed. In doing so, the Court found that an insurer’s duty to defend could not be triggered by speculating about extrinsic facts and unpled claims regarding potential liability.

Steven Plitt is an accomplished author and expert witness, and has been a licensed attorney for 33 years. During his career, he has reviewed and analyzed more than 6,000 claim files from 100 different insurance companies. Based in Phoenix, Arizona, he serves as counselor and expert for insurance coverage and bad faith claims nationwide. For more information or to set up an appointment, please visit his website at