Most liability insurance policies contain two promises to the policyholder. The first is the insurer’s promise to pay for the policyholder’s legal liability — the duty to indemnify. The second is the insurer’s promise to defend the policyholder against a covered suit — the duty to defend. When a policyholder is faced with a claim by a third party, the insurer must pay the costs of defending the lawsuit as well as any resulting judgment against the policyholder.
The duty to defend is broader than the duty to indemnify — an insurer must defend against any claim that is even possibly covered by the policy, whereas the insurer need only indemnify against claims that are actually covered by the policy. However, narrow interpretations of undefined policy terms can allow an insurer to escape its duty to defend.
