The eight-corners rule is a rule applied by courts to determine whether an insurance company (insurer) has a duty to defend a claim made against its insured policyholder (insured). The eight-corners rule provides that the duty to defend is determined by comparing the “four corners” of the plaintiff’s pleading (lawsuit) with the “four corners” of the liability insurance policy.

In applying the eight-corners rule, courts generally do not consider facts or evidence from outside the four corners of each of these documents and take the plaintiff’s factual allegations in the pleading as true for purposes of determining whether the insurer has a duty to defend.

But some courts have held that outside or extrinsic evidence may be considered if it demonstrates collusion or fraud between the plaintiff and the insured for the purpose of invoking an insurer’s duty to defend.

Courts generally apply the eight-corners rule liberally and resolve any doubts in favor of the insured by finding the insurer has a duty to defend the insured against the claim(s).

In Colorado, the eight-corners rule is utilized to determine if an insurer has a duty to defend its insured in a lawsuit. This rule involves comparing the allegations within the complaint (the 'four corners' of the plaintiff's pleading) against the coverage outlined in the insurance policy (the 'four corners' of the policy). Colorado courts adhere to this rule and typically do not consider extrinsic evidence when making this determination. They assume the plaintiff's allegations to be true for the purpose of deciding on the duty to defend. However, if there is evidence of fraud or collusion between the plaintiff and the insured that could affect the insurer's duty to defend, courts may consider such evidence. The rule is applied in a manner that favors the insured, meaning that any ambiguity or doubt usually results in a finding that the insurer has a duty to defend the insured against the claims.