Duty to defend: Overview, definition, and example
What is duty to defend?
Duty to defend refers to the legal obligation of one party (usually an insurer) to provide defense or legal representation to another party (typically the insured) when that party is facing a lawsuit or legal claim. This duty is typically outlined in an insurance policy, where the insurer agrees to cover the costs of legal defense (including attorney fees and court costs) for the insured if they are sued for a covered event or claim.
For example, if a business is sued for damages related to an incident covered under its liability insurance policy, the insurer has a duty to defend the business in the lawsuit.
Why is duty to defend important?
The duty to defend is important because it ensures that individuals or businesses are not financially burdened with the cost of defending themselves in legal matters. Legal defense can be expensive, and having insurance cover those costs allows the insured party to focus on the legal case itself, rather than worrying about mounting legal fees. For insurers, providing a defense is part of the service they offer, and it helps protect the policyholder from significant financial risk.
In business and personal insurance, the duty to defend helps avoid situations where an insured party is left unprotected, which could lead to a default judgment or settlement without a fair opportunity to argue their case.
Understanding duty to defend through an example
Imagine a company has liability insurance that covers lawsuits related to accidents occurring on its property. A customer slips and falls in the company’s store and decides to sue for medical expenses. The company’s insurer is required by the insurance policy to step in and provide legal defense. This means the insurer will hire an attorney, pay for court costs, and represent the company throughout the lawsuit process, all without the company having to bear the cost directly.
In another example, a homeowner has insurance coverage for damages caused by fire. If the homeowner is sued by a neighbor whose property was damaged in a fire originating from the insured home, the insurance company has a duty to defend the homeowner in court and cover the associated legal costs, as long as the claim falls within the scope of the insurance coverage.
Example of duty to defend clause
Here’s how a duty to defend clause might look in an insurance policy:
“The Company agrees to defend the Insured in any lawsuit brought against them for claims arising from bodily injury, property damage, or other covered risks under this policy. The Company will provide legal representation and cover the costs associated with the defense, including attorney fees and court expenses, up to the policy limits.”
Conclusion
The duty to defend is an essential provision in insurance contracts, requiring insurers to provide legal defense and cover associated costs when an insured party is involved in a lawsuit related to a covered event. This duty ensures that the insured can defend themselves without bearing the financial burden of legal expenses, protecting them from potentially significant costs in the event of a legal dispute.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.