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duty to defend

A term used to describe an insurer's obligation to provide an insured with defense to claims made under a liability insurance policy. As a general rule, an insured need only establish that there is potential for coverage under a policy to give rise to the insurer's duty to defend. Therefore, the duty to defend may exist even where coverage is in doubt and ultimately does not apply. Implicit in this rule is the principle that an insurer's duty to defend an insured is broader than its duty to indemnify. Moreover, an insurer may owe a duty to defend its insured against a claim in which ultimately no damages are awarded, and any doubt as to whether the facts support a duty to defend is usually resolved in the insured's favor.

With respect to directors and officers (D&O) and employment practices liability insurance (EPLI) policies, policies containing explicit "duty to defend" wording obligate an insurer to assume control of the claim defense process, including selecting counsel and paying legal bills. In contrast, non-duty to defend (or duty to pay) policies require only that the insurer reimburse the insured for funds expended by the insured in defending a claim. See also Duty to pay.


Links for IRMI Online Subscribers Only: CLI V.C, V.P, XIII.E; CRT X.D; CAI VIII.D; IWC VI.C; PLI XXI.E; PRMI 5.D, 11.B; D&O Coverage Guide

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