What does duty to defend mean in insurance?

What does duty to defend mean in insurance?

Generally speaking, when a policy is written on a duty to defend basis, the insurer must defend the entire claim even if it is only partially covered under the policy. At the end of the claim, the insurer may have the right to “true up” on the defense costs, allocating between covered and uncovered matters.

What is the difference between the duty to defend and the duty to indemnify?

Finding the Two Duties The duty to defend is a term that describes an insurer’s obligation to provide an insured with a defense to claims made under an insurance policy. The duty to indemnify describes an insurer’s obligation to pay a claim for loss or damage against an insured.

What does it mean to defend and indemnify?

The duty to defend triggers an obligation to act when a claim, which is covered by the indemnification provision in the contract, is brought by a party against the indemnitee. Most states consider the duty to indemnify and to defend to be distinct obligations.

What is right and defend duty?

The term “duty-to-defend” essentially means that in the event a claim is made against an insured for an alleged wrongful act, the insurance carrier has the right and duty-to-defend the claim—even if the claim is groundless, false, or fraudulent.

How do courts determine if an insurer has a duty to defend?

Courts typically determine an insurer’s duty to defend its insured under a liability policy in one of two ways. An insurer has a duty to defend if the face of the complaint alleges something covered and does not allege an exclusion to coverage.

What does full reservation of rights mean?

Reservation of rights by an insurance company is a statement of intention that they are reserving their full legal rights. This serves as a notice that they are not waiving their legal rights to take action at a later date.

What is a hammer clause?

A hammer clause is an insurance policy clause that allows an insurer to compel the insured to settle a claim.

When the duty to indemnify is broader than the duty to defend?

The duty to defend is also broader than the duty to indemnify because insurance companies have a legal duty to defend the entire lawsuit, so long as any one claim has the potential to result in indemnity coverage – even if there are other claims that are not covered.

When does the duty to defend end?

Policy language and even other court findings tend to support the position that a carrier’s duty to defend ends when there is no longer any charge or complaint before the court potentially triggering coverage. In fact, holding otherwise seems to punish the insurance carrier for extending any coverage.

What is the duty to defend on renters insurance?

Duty To Defend In A Renters Insurance Liability Claim. Your insurance company has a duty to defend you in a renters insurance liability claim. That means that your insurer is obligated to pay for representation. They’re defending you, and the lawyer is defending you – not the insurance company. This duty to defend generally arises as soon as the insurance company is aware of a claim.