§ 10.1 Allegations in the Complaint
Under South Carolina law, coverage questions, including an insurer's duties to defend and to indemnify a claim brought against its insured are determined by the allegations of the complaint.1 If the underlying complaint creates a possibility of coverage under an insurance policy, the insurer's duty to defend is triggered.2 "If the facts alleged in the complaint fail to bring a claim within the policy's coverage, the insurer has no duty to defend."3 In the context of a declaratory judgment action concerning coverage, courts will look to the allegations of the complaint to determine both the duty to defend and indemnify.4 However, an insurer's duty to defend is not exclusively controlled by the allegations of the complaint. The insurer's duty to defend can be affected by uncontroverted facts outside the complaint that are known to the insurer.5 The South Carolina Supreme Court has stated that courts "must look beyond the labels describing the acts to the acts themselves which form the basis of the claim against the insurer."6
An insurer's duty to defend, while separate and distinct from its duty to indemnify, is inter-related to its obligation to pay a judgment rendered against the insured.7 If, however, there is possible coverage for at least one of the claims asserted in the complaint, the insurer will have a duty to defend all claims regardless of whether the remaining claims would be covered, and an insurer is not...
