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 South Dakota, the eight-corners rule is utilized to determine if an insurer has an obligation to defend its insured in a lawsuit. This rule involves a comparison of the lawsuit's allegations (the 'four corners' of the plaintiff's pleading) with the terms of the insurance policy (the 'four corners' of the policy). South Dakota courts adhere to this rule by focusing on the content of these documents without considering external facts or evidence. The allegations made in the lawsuit are assumed to be true for the purpose of this assessment. While the rule is applied strictly, there are exceptions where extrinsic evidence may be considered, particularly in cases of alleged collusion or fraud aimed at triggering the insurer's duty to defend. South Dakota courts tend to interpret the eight-corners rule in a manner that favors the insured, meaning that if there is any doubt or ambiguity, the insurer is likely to be found to have a duty to defend the insured.