Published in Defense Research Institute
Under Kentucky law, “[t]he insurer has a duty to defend if there is any allegation which potentially, possibly or might come within the coverage of the policy[,]” and the determination must be made at the outset of litigation. James Graham Brown Found., Inc. v. St. Paul Fire & Marine Ins. Co., 814 S.W.2d 273, 279 (Ky. 1991) (citations omitted). An insurer must compare the allegations in a complaint with the terms of an insurance policy to determine whether it has a duty to defend its insured. Id. at 279. The “terms of insurance contracts have no technical meaning in law and are to be interpreted according to the usage of the average man and as they would be read and understood by him[.]” Id. at 280. Where the terms of an insurance contract are clear and unambiguous, Kentucky courts apply the ordinary meaning of the words chosen by the insurer. Id. To the contrary, where an ambiguity in the insurance contract exists, Kentucky courts apply a “rule of interpretation known as the reasonable expectation doctrine, which resolves an insurance- policy ambiguity in favor of the insured’s reasonable expectation.” True v. Raines, 99 S.W.3d 439, 443 (Ky. 2003). It is important to note, however, that the rule of strict construction against an insurer does not mean that every doubt must be resolved against it and does not interfere with the rule that the policy must receive a reasonable interpretation consistent with the parties’ object and intent or narrowly expressed in the plain meaning or language of the contract. Brown v. Ind. Ins. Co., 184 S.W.3d 528 (Ky. 2005). Finally, “[o]nly actual ambiguities, not fanciful ones, will trigger application of the doctrine.”
