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.