While Texas continues to strictly follow the “eight corners” rule about insurance coverage, that is a doctrine grounded in contract law. “Given the contractual foundations of the eight-corners rule, we conclude it does not bar courts from considering such extrinsic evidence regarding collusive fraud by the insured in determining the insurer’s duty to defend.” And while undisputed evidence of such fraud could justify an insurer’s denial of coverage without filing a declaratory-judgment action, the potential damages under various statutes “are adequate to ensure that insurers will seek a favorable declaratory judgment before withdrawing a defense in most cases where there is a real controversy regarding the duty to defend.” Loya Ins. Co. v. Hurtado Avalos, No. 18-0837 (May 1, 2019).
