On October 28, 2021, the Nevada Supreme Court joined 26 other state supreme courts, holding the insured has the burden to prove an exception to an exclusion. The question before the court was if an insurance policy provides coverage, but that coverage is then modified by an exclusion, who has the burden to demonstrate an exception to the exclusion? Can an insured use extrinsic evidence to meet that burden? These issues routinely arise in coverage disputes.
The underlying action arose from Nevada’s construction defect litigation and concerned whether there was a duty to defend. Nevada adopted the majority rule that since the insured bears the initial burden of establishing coverage, the insured also should bear the burden of proving an exception to an exclusion applies. The court also concluded that the insured may rely on extrinsic evidence because “the duty to defend must be determined at the outset of litigation based upon the complaint and any other facts available to the insurer” at the time the insured tendered the defense.