Without Reservations: Fourth Circuit Affirms That Vague Reservation of Rights Waived Insurers’ Coverage Arguments

Lara Degenhart Cassidy and Matthew J. Revis | Hunton Andrews Kurth

The Fourth Circuit recently affirmed insurance coverage for a South Carolina policyholder based on the “axiomatic principle” that an insurer which fails to fully and fairly articulate its potential coverage defenses in a reservation of rights letter loses the right to contest coverage on those grounds. Stoneledge at Lake Keowee Owner’s Assoc. v. Cincinnati Ins. Co., No. 19-2009, 2022 WL 17592121 (4th Cir. 2022) (quoting Harleysville Group Insurance v. Heritage Communities, Inc., 803 S.E.2d 288 (S.C. 2017)). More particularly, in Stoneledge, the Fourth Circuit affirmed per curiam a South Carolina District Court’s grant of summary judgment in favor of a homeowners association that had successfully sued its general contractors for construction defects and was seeking to recover the damages owed from the contractors’ insurers. The Fourth Circuit agreed that the insurers’ vague reservation of rights letters failed to reserve the defenses on which the insurers purported to deny coverage.

The question before the court in Stoneledge was whether the two insurers that had each agreed to defend their respective general-contractor insureds in the homeowner association’s underlying litigation had sufficiently informed their policyholders of their coverage positions. Specifically, the court considered whether the insurers provided notice of their intention to challenge coverage on specific bases and explained why those bases applied in their respective reservation of rights letters. Both of the insurers’ letters followed the typical approach of identifying various policy provisions and exclusions and outlining the general mechanics of those provisions, but they fell short of applying the provisions or exclusions to the facts in the case at hand. Further, the letters stated that the insurers would reevaluate how the provisions applied as the underlying case progressed. One of the insurer’s letters expressed doubt as to coverage but did not offer any analysis on the reasons for the prospective coverage denial.

The Fourth Circuit concluded that the insurers in Stoneledge had not sufficiently reserved their rights to deny coverage because their reservations of rights letters were simply copy-and-paste documents employing wait-and-see tactics. Adopting the “axiomatic principle” of insurance law from Harleysville, 803 S.E.2d 288, that “an insured must be provided sufficient information to understand the reasons the insurer believes the policy may not provide coverage,” the court agreed that “generic denials of coverage coupled with furnishing the insured with a copy of all or most of the policy provisions (through a cut-and-paste method) [are] not sufficient.” Id. at 297. The court also confirmed that an insurer saying “we will let you know later” does not constitute a valid reservation of rights. Id. at 299. Simply put, the Stoneledge court reaffirmed that the onus is on the insurers to show their work when writing their reservation of rights letters.

The Fourth Circuit also rejected the insurers’ contention that the court was creating coverage where none existed by finding that the insurers had waived defenses unarticulated in their respective reservation of rights letters. Looking to settled South Carolina law, the court concluded that an inadequate reservation of rights letter operated as an implied waiver of defenses and prevented a later coverage denial, even if the insurer disputed whether a covered event ever occurred. Ex parte Builders Mutual Insurance Company, 847 S.E.2d 87, 94 (S.C. 2020).

The Fourth Circuit opinion highlights that policyholders should evaluate reservations of rights from their insurers as comprehensive statements of the grounds on which the insurers intend to challenge coverage, and that the following shortcomings in reservation of rights letters may limit the insurer’s ability to pursue unarticulated or ill-defined coverage defenses down the road:

  • mere identification of policy information and policy terms without substantive analysis;
  • no discussion of the insurer’s position as to the relevant policy provisions mentioned;
  • no explanation of reasons for potentially denying coverage; and
  • failure to reserve rights on specific issues.

In sum, policyholders should be mindful to scrutinize reservation of rights letters and consult coverage counsel if faced with insurers employing claims-handling strategies that leave open questions about the scope of the insurer’s reservation of rights.

When one of your cases is in need of a construction expert, estimates, insurance appraisal or umpire services in defect or insurance disputes – please call Advise & Consult, Inc. at 888.684.8305, or email experts@adviseandconsult.net.

Two Insurers Protected the Insured and Resolved the Coverage Dispute Later

Barry Zalma | Zalma on Insurance

When two insurers dispute which is obligated to defend and indemnify the insured in a bodily injury suit, they both paid half of the settlement and agreed to resolve their differences later in a declaratory relief action – an action of absolute good faith.

In Old Republic Insurance Company v. The Young Men’s Christian Association a/k/a YMCA Of Metropolitan Chicago and Riverport Insurance Company, 2022 IL App (1st) 210294-U, No. 1-21-0294, Court of Appeals of Illinois, First District, Fifth Division (May 27, 2022) the Court of Appeals resolved the dispute after the trial court ruled in favor of Old Republic.


Old Republic Insurance Company (Old Republic), sued for declaratory judgment against the Young Men’s Christian Association of Metropolitan Chicago (YMCA) and Riverport Insurance Company (Riverport). The circuit court granted summary judgment in favor of Old Republic. YMCA and Riverport appealed.

In September 2012, YMCA hired Air Comfort Corporation (Air Comfort) as the contractor to perform routine HVAC maintenance on YMCA’s Chicagoland facilities. On September 17, 2012, YMCA and Air Comfort entered into a “Master Agreement Between Owner and Contractor” (Master Agreement). The Master Agreement was drafted by YMCA’s counsel. The Master Agreement provided: Section 6 of the Master Agreement required Air Comfort to obtain commercial liability insurance and to name YMCA as an additional insured on the policy.

On May 13, 2013, an Air Comfort employee, Joseph Dale, sustained injuries while working on the upgrade project at the Indian Boundary facility. Mr. Dale filed a negligence complaint against YMCA, claiming that YMCA failed to inspect and safely maintain the vent pit and grating at its Indian Boundary facility which resulted in his injuries.

YMCA tendered defense and indemnification of Mr. Dale’s lawsuit to Air Comfort’s insurance carrier, Old Republic. Old Republic denied coverage.

The declaratory relief suit sought a declaration that Old Republic owes “no duty to defend, indemnify or otherwise provide additional insured coverage to YMCA” under Old Republic’s insurance policy with Air Comfort for losses incurred in connection with Mr. Dale’s lawsuit. Old Republic’s policy required additional insured persons or organizations to be included in a written contract or agreement.

The complaint alleged: “There is no written contract that required Air Comfort to name YMCA as an additional insured on its *** Policy with respect to work performed by Air Comfort at the Indian Boundary YMCA pursuant to any such contract.”

While the declaratory judgment action was pending, Mr. Dale settled his lawsuit against YMCA for $700,000. In turn, YMCA and Riverport entered into a separate agreement with Old Republic, entitled “Settlement Agreement and Release.” The Settlement Agreement and Release provided that YMCA and Riverport would pay half of Mr. Dale’s settlement amount ($350,000) and Old Republic would pay the other half ($350,000).

The parties agreed that the resolution of Mr. Dale’s lawsuit “does not in any way resolve the matters to be litigated” in the declaratory judgment action, which the Settlement Agreement and Release referred to as “the Coverage Suit.” Pursuant to the Settlement Agreement and Release, the parties agreed that:

“[I]f in the Coverage Suit a judicial determination is made that Old Republic owes additional insured coverage under the Old Republic Policy to YMCA for the [Mr.] Dale Lawsuit, then Old Republic will pay YMCA and [Riverport] $350,000 plus the attorneys’ fees and costs incurred by the YMCA and [Riverport] in defending the [Mr.] Dale Lawsuit.” Similarly, the Settlement Agreement and Release further provided that YMCA and [Riverport] will pay Old Republic $350,000 plus $197,000 for a total payment of $547,000. This would reimburse Old Republic for the $350,000 paid to [Mr.] Dale plus the waived workers compensation lien $197,000.”

The trial court granted Old Republic’s motion for summary judgment and denied YMCA and Riverport’s motion. In so ruling, the trial court stated: “This Court finds there’s no genuine issue of material fact [t]hat there is no writing of which the YMCA becomes an additional insured for that specific location.”


Summary judgment was granted by the trial court in this case, on the basis that the Indian Boundary Statement of Work did not require Air Comfort to add YMCA as an additional insured on its insurance policy, and so Old Republic does not have a duty to provide coverage to YMCA for Mr. Dale’s lawsuit.

Significantly, YMCA and Riverport do not contend that the Indian Boundary Statement of Work is ambiguous. The appellate court concluded that  Indian Boundary Statement of Work is, an unambiguous contract, as the language is clear, and the general meaning is easy to ascertain. The Indian Boundary Statement of Work does not provide, anywhere or in any way, that the parties intended for Air Comfort to add YMCA as an additional insured on its insurance policy with Old Republic. In fact, the word “insurance” is not even mentioned in the Indian Boundary Statement of Work.

The appellate court concluded that the Indian Boundary Statement of Work does reference a contract entitled, “MASTER SERVICES AGREEMENT DATED FEBRUARY 11, 2013,” and “Standard From [sic] of Agreement Between Owner and Contractor, dated February 11, 2013.” But, as the trial court pointed out, no such contract document exists. Further, YMCA and Riverport do not claim that they can produce that document. And they do not offer any other explanation regarding the discrepancies in the description of the referenced, non-existent, contract document.

Rather, YMCA and Riverport asked the court to look to the Master Agreement and the Irving Park Agreement to demonstrate the parties’ intent for the Indian Boundary Statement of Work. However, if a contract is unambiguous on its face, extrinsic evidence may not be used to interpret it.

Mr. Dale’s lawsuit arose out of the work contracted in the Indian Boundary Statement of Work between Air Comfort and YMCA for the upgrade project at the Indian Boundary facility. The Indian Boundary Statement of Work is a clear and unambiguous contract that does not reference any other existing contract document; there is no reason for the court to look to another contract.

Accordingly, the court of appeal concluded that there is no genuine issue of material fact that the Indian Boundary Statement of Work did not require Air Comfort to add YMCA as an additional insured on its insurance policy, and so, Old Republic is not required to provide insurance coverage to YMCA for Mr. Dale’s lawsuit. The trial court therefore properly granted summary judgment in favor of Old Republic in the declaratory judgment action


The two insurers did the right thing for their insured, the YMCA. The lawyer for the YMCA, who drew the various contracts between the Y and Air Comfort, erred in drafting a contract incorporating a non-existent contract and failed – for the project where Mr. Dale was injured – to require that Air Comfort make the Y an additional insured.  The two insurers, although, they disagreed, acted in absolute good faith to their insured and resolved their differences without exposing the insured to damages.

When one of your cases is in need of a construction expert, estimates, insurance appraisal or umpire services in defect or insurance disputes – please call Advise & Consult, Inc. at 888.684.8305, or email experts@adviseandconsult.net.

Resolving Insurance Coverage Disputes – What Every Legal Department Should Know

Scott Godes and David E. Wood | BT Policyholder Protection Blog

In 2022, the insurance industry has been emboldened to issue improper denials of insurance coverage for claims and lawsuits, threaten rescission of insurance policies and sell insurance policies with hidden trapdoors buried in endorsements. This could create a potentially devastating impact on a company’s bottom line. At Barnes & Thornburg, with many decades of insurance recovery and bad faith claim prosecution for corporate insureds under our belts, we never represent insurance companies. Our loyalties are to our policyholder clients alone. Through this singular focus, we have seen a thing or two – and not always good things.

As we move headlong into Q2, legal departments, risk managers and finance executives should consider having their insurance policies reviewed and thoroughly analyzed. We have seen more policies issued in this past year with exclusions that would make coverage illusory – or not worth the paper they’re written on, based on how insurance companies interpret them. Unfortunately, too many companies – having paid their premiums on time for years — are surprised when their claims get denied simply because their insurance carriers take the position that their policies do not provide the coverage they thought they were buying.

Our track record reflects our success in resolving insurance coverage disputes in all areas of policy enforcement, including D&O, cyber security, long-tail, manufacturing, climate change, construction, media and more. Unfortunately, when a claim adjuster unreasonably declines coverage for a claim, it is not uncommon for the insurer’s underwriters to offer the policyholder a better policy for the following year that covers the subject matter of the denied claim, for an additional premium. There are better options.

Evaluating a Denial of Coverage Through a Coverage Opinion

In a high-dollar or complicated claim, it is standard operating procedure for an insurance company to engage carrier-friendly outside counsel to write a coverage opinion as part of the claim adjustment process. That opinion evaluates the claim and provides a recommendation about whether it is covered. These insurance company lawyers know who pays the bills, and this can lead to skewed coverage assessments calculated to support the bellicose positions they know their clients want to take.

A best practice is for a policyholder to engage its own coverage attorney to provide the same kind of analysis. Having in hand an evaluation of coverage grants, endorsements, exclusions and limitations at the outset of a claim allows companies to make early cost-benefit decisions, and to be better prepared to plan a path for resolving the dispute with the insurance company.

This best practice for insurance coverage disputes is an investment to help avoid surprises down the line. A clarifying memo laying out the issues and providing the pros and cons of what the case might look like if litigated helps evaluate whether to “hold ‘em, or fold ‘em.”

When one of your cases is in need of a construction expert, estimates, insurance appraisal or umpire services in defect or insurance disputes – please call Advise & Consult, Inc. at 888.684.8305, or email experts@adviseandconsult.net.

Seven Tips for Mediating Complex Insurance Coverage Disputes

Rosemary Loehr, Andrew Reidy and Joseph Saka | Lowenstien Sandler

Mediation can be a viable way to reach a satisfactory settlement on an insurance dispute. When successful, mediation offers a less costly and time-consuming alternative to litigation and often allows for more candor and creativity in crafting a successful resolution. Below are seven tips for mediating an insurance matter and achieving a resolution.

  1. Deciding When to Mediate
    Many mediations fail because the insurer claims to lack information about the claim or the damages or did not have the opportunity to review the information. Without information substantiating your claim, mediation is unlikely to be productive. It may be that some factual investigation or discovery is necessary to put the case in a position to be resolved. To get the most out of mediation, a policyholder should focus on the information that can be reasonably gathered to satisfy the insurer’s due diligence in making a coverage determination. For example, if the insurer has valid questions regarding the amount of a loss, then policyholders should consider providing their insurer with factual information to substantiate the loss amount before any mediation so that the insurer has a better understanding of its exposure.
  2. Selecting the Mediator
    Selecting the mediator is often a negotiated process with counsel for the insurance carrier. Insurance coverage cases have some unique issues, especially in light of the rules of insurance policy construction, bad-faith damages, and claims-handling statutes. Several of the major insurers have “approved” lists of mediators, and there may need to be additional discussion if the policyholder wants to use a mediator not on the list. But, ultimately, when considering potential mediators, prioritize the ones who are familiar with insurance coverage cases, have a track record of success, and do not treat insurance companies as their preferred client.
  3. Evaluating Your Claim
    Understanding the strengths and weaknesses of your claim—and your insurer’s defense to your claim—is essential to a successful mediation. When preparing for mediation, consider creating a list with three to five questions that you think will be difficult for your adversary to answer, and then do the same for your claim. Policyholders need to understand that many insurance companies are frequent litigators and will not necessarily be intimidated by the prospect of litigation. Similarly, threats of bad-faith claims rarely will motivate the insurer to settle unless the insurer reasonably believes it has exposure in excess of its policy limits. That said, insurance companies, like most businesses, are motivated to find a reasonable resolution that cuts off legal costs and reduces risk.
  4. Understanding How Insurers Operate
    Many policyholders get frustrated during mediation because of the lack of steady progress throughout the mediation day. As a result, a policyholder must be mindful of two concepts: First, claims representatives have only a certain amount of authority, and any sum above that amount must be approved by one or more senior claims managers or internal committees. Sometimes this is done in advance of mediation, but not always. Second, as a tactical matter, most insurers work slowly during the mediation process by taking long periods to respond to offers and negotiating in very small increments. This strategy is often designed to frustrate the policyholder because insurers have learned that forcing a long, frustrating mediation day will prompt some policyholders to jump at the first decent offer. Being mindful of these concepts will help prevent exasperation during mediation.
  5. Helping the Mediator
    It is important to have your key documents and legal authority on hand for the mediator. It is virtually guaranteed that your mediator will not have time to commit key facts, documents, or case law to memory in advance of the mediation. So if a specific decision or document is critical to your case, then have the material ready to highlight and hand over to the mediator.
  6. Preparing for the Critical, Non-Monetary Terms
    It is not uncommon for insurance mediations to stall because the parties cannot reach agreement on the terms of the settlement. Aside from the settlement amount, the two most common areas of dispute are the scope of the release and whether the insurer will insist on an indemnification provision. The parties should address these terms during the mediation day so that the settlement does not fall apart during the final drafting process. Importantly, insurers often do agree to settlements without indemnifications or with limited indemnifications. Policyholders can push back on this demand by noting that it is not a requirement under most insurance policies.
  7. Having a Plan for Next Steps
    You should create a realistic goal for the mediation. Be sure to have an ideal settlement amount in mind, with a range of options that you will agree to; also, create a plan for concrete steps to take if the mediation does not resolve the case. If you do not come to a resolution, will you file a complaint? Will you encourage the mediator to make a mediator’s proposal? Or do you want to try another mediation later? Know the answers to these questions before going into the mediation so that you arrive ready to achieve your goals.

When one of your cases is in need of a construction expert, estimates, insurance appraisal or umpire services in defect or insurance disputes – please call Advise & Consult, Inc. at 888.684.8305, or email experts@adviseandconsult.net.

The Insured has the Duty to Prove Coverage for Defense

Barry Zalma | Zalma on Insurance

In Zurich American Insurance Company v. Ironshore Specialty Insurance Company, 137 Nev.Adv.Op. 66, No. 81428, Supreme Court of Nevada, En Banc (October 28, 2021) the Supreme Court was asked to answer inquiries from the Ninth Circuit because two federal district courts issued conflicting decisions regarding whether, in Nevada, the insured or the insurer has the burden of proving that an exception to an exclusion of coverage provision applies. The Ninth Circuit certified the following questions to the Supreme Court of Nevada:

  1. Whether, under Nevada law, the burden of proving the applicability of an exception to an exclusion of coverage in an insurance policy falls on the insurer or the insured?
  2. Whichever party bears such a burden, may it rely on evidence extrinsic to the complaint to carry its burden, and if so, is it limited to extrinsic evidence available at the time the insured tendered the defense of the lawsuit to the insurer?


Throughout the 2000s, thousands of homes in Nevada were built by subcontractors under the direction of several development companies. During that period, these subcontractors were insured by appellants Zurich American Insurance Company and American Guarantee and Liability Insurance Company (collectively, Zurich). After the work on the homes was completed, the subcontractors switched insurers, obtaining insurance from respondent Ironshore Specialty Insurance Company (Ironshore). Ironshore’s policy insured the subcontractors against damages attributed to bodily injury or property damage that occurred during the new policy period. The policy provides that if the insured becomes legally obligated to pay damages because of bodily injury or property damage that qualifies under the policy, Ironshore will pay those sums. It further provides that Ironshore will have the right and duty to defend the insured if the suit seeks damages to which the policy applies. The policy applies only if the bodily injury or property damage is caused by an occurrence within the coverage territory and applicable policy period.

The Ironshore policy contains a “Continuous or Progressive Injury or Damage Exclusion” that modifies the insurance coverage provided under the policy. The exclusion provides that the policy does not apply to any existing bodily injury or property damage, except for “sudden and accidental” property damage:

This insurance does not apply to any “bodily injury” or “property damage” . . . which first existed, or is alleged to have first existed, prior to the inception of this policy. “Property damage” from “your work[, ]” … or the work of any additional insured, performed prior to policy inception will be deemed to have first existed prior to the policy inception, unless such “property damage” is sudden and accidental and takes place within the policy period.

Between 2010 and 2013, homeowners who had purchased homes within these development projects brought 14 construction defect lawsuits against the developers in Nevada state court, alleging the properties were damaged from construction defects.  Zurich settled claims against the subcontractors and then, in Nevada Zurich I, sued Ironshore in federal court seeking contribution and indemnification for the defense and settlement costs, as well as a declaration that Ironshore had owed a duty to defend the subcontractors against the underlying lawsuits. [Assurance Co. of Am. v. Ironshore Specialty Ins. Co. (Nevada Zurich I, No. 2:15-cv-00460-JAD-PAL, 2017 WL 3666298, at *1 (D. Nev. Aug. 24, 2017).] Ironshore moved for summary judgment, arguing that it had no duty to defend because there was no potential for coverage under the terms of the policy.

The federal district court granted summary judgment in favor of Ironshore. The court rejected the argument that the “sudden and accidental” exception to the exclusion of the coverage applied, reasoning that none of the complaints in the underlying lawsuits alleged that the damage occurred suddenly, and that without any evidence to support such an allegation, Zurich failed to carry its burden. In issuing this holding, the court implicitly concluded that the insured has the burden of establishing that an exception to an exclusion applies. The court also assumed that Zurich could have introduced extrinsic evidence to satisfy its burden, but it did not directly address the question.

Around the same time, another federal district court, in Assurance Co. of America v. Ironshore Specialty Insurance Co. (Nevada Zurich II, No. 2:13-cv-2191-GMN-CWH, 2015 WL 4579983 (D. Nev. July 29, 2015), reached a different conclusion in a substantially identical case. The judge in that case concluded that Ironshore owed a duty to defend because the underlying complaints “did not specify when the alleged property damage occurred and did not contain sufficient allegations from which to conclude that the damage was not sudden and accidental.”

The Nevada Zurich II court concluded that Ironshore failed to satisfy its burden of proving that the exception to the exclusion did not apply, implicitly concluding that the insurer had the burden of proving the nonapplicability of the exception to the exclusion. The Nevada Zurich II court also assumed that extrinsic evidence was admissible but did not address the issue directly.


In Nevada, insurance policies are treated like other contracts, and thus, legal principles applicable to contracts generally are applicable to insurance policies. When reading a provision of an insurance policy, the court’s interpretation must include reference to the entire policy, which will be read as a whole in order to give reasonable and harmonious meaning to the entire policy. Under an insurance policy, the insurer owes two contractual duties to the insured: the duty to defend and the duty to indemnify. Only the duty to defend is at issue.

The insurer bears a duty to defend its insured whenever it ascertains facts which give rise to the potential of liability under the policy. Conversely, there is no duty to defend where there is no potential for coverage. If there is any doubt about whether the duty to defend arises, this doubt must be resolved in favor of the insured. However, the duty to defend is not absolute. A potential for coverage only exists when there is arguable or possible coverage.

Courts in many jurisdictions have concluded that the insured bears the burden of proving the sudden and accidental exception to an exclusion of coverage. The trend clearly appears to place the burden on insureds to prove that an exception to an exclusion applies to restore coverage. Some courts do not agree.

Nevada law provides that an insurance policy should be read according to general contract principles. Furthermore, Nevada law requires that the insured establish coverage under an insurance policy, whether claiming a duty to indemnify or a duty to defend. The majority approach is in accordance with basic tenets of evidence law in Nevada. The party that carries the burden of production must establish a prima facie case. The burden of persuasion rests with one party throughout the case and determines which party must produce sufficient evidence to convince a judge that a fact has been established. In Nevada, the burdens of production and persuasion rest with the insured, who has the initial burden of proving that the claim falls within policy coverage.

The duty to defend arises when there is a potential for coverage, whereas the duty to indemnify arises when the insured’s activity and the resulting damage actually fall within the policy’s coverage.

The Insured May Use Extrinsic Facts Available To The Insurer At The Time Of Tender To Prove The Insurer Had A Duty To Defend

An insurer bears a duty to defend its insured whenever it ascertains facts which give rise to the potential of liability under the policy. Thus, under Nevada law, an insured may present such extrinsic facts to the insurer, and rely upon them, in order to argue that the insurer owes a duty to defend as within an exception to an exclusion.

Neighboring California has held that “[a]n insurer’s duty to defend must be analyzed and determined on the basis of any potential liability arising from facts available to the insurer from the complaint or other sources available to it at the time of the tender of defense.” Waller v. Truck Ins. Exch., Inc., 900 P.2d 619, 632 (Cal. 1995) (quoting CNA Cas. of Cal. v. Seaboard Sur. Co., 222 Cal.Rptr. 276, 278-79 (Ct. App. 1986)). Since the duty to defend must be determined at the outset of litigation based upon the complaint and any other facts available to the insurer, the Nevada Supreme Court held that the insured may use extrinsic facts that were available to the insurer at the time it tendered its defense to prove there was a potential for coverage under the policy and, therefore, a duty to defend.

The certified questions were, therefore, answered as follows:

  1. the burden of proving the exception to an exclusion is on the insured, not the insurer; and
  2. in fulfilling its burden to prove the exception to an exclusion applies, the insured may utilize any extrinsic facts that were available to the insurer at the time the insured tendered defense to the insurer.


Accepting the rule followed by the majority of the courts in the U.S. and basic common sense, the Nevada Supreme Court applied the basic rule of law that it is the insured who is obligated to prove that coverage applies and can use extrinsic evidence to establish the coverage. So, in this who’s on first routine, the insured is on first to prove that an exception to an exclusion applies and if it succeeds the burden shifts to the insurer to prove the opposite.