Exclusion Must Eliminate Every Claim
A commercial general liability (CGL) insurer for a medical supplier sought a declaratory judgment that it owed no coverage to the supplier and manufacturer of blood glucose test strips for claims alleging fraud. The carrier cited its knowing violation and criminal acts exclusions to avoid coverage. The Wisconsin Supreme Court rejected the insurance company’s arguments finding a sufficient causal connection for personal and advertising injury coverage. It reasoned although fleshing out the factual allegations at trial may affect ultimate indemnification under the policy, it did not bear on the duty to defend. The court also determined unless the exclusions eliminated every pleaded claim, leaving no potentially covered advertising-injury claim for which the insured could be liable, the duty to defend remained intact. It noted the manufacturer could prevail on several advertising injury claims without establishing the insured knowingly violated its rights; also the complaint included multiple counts not rooted in criminal conduct.