What Is a Duty to Defend vs. a Duty to Indemnify?

Are you confused by legal jargon and wish a lawyer could explain it? That’s exactly what we’ve done in this legal glossary series. This time, Chicago car accident lawyer Andrew Kryder explains the difference between a duty to defend vs. duty to indemnify.

When you buy insurance, it’s important to know the difference between the insurer’s duty to defend and duty to indemnify. A duty to defend means the insurer must provide legal representation for you—the policyholder—for claims arising from accidents, injuries, or other covered events.

On the other hand, a duty to indemnify is an obligation of the insurance company to pay any damages that may be owed as a result of a legal claim brought against you. This indemnity agreement covers the cost of medical bills, lost wages, pain and suffering, and more for someone you injured.

It is important to know both your policy limits and duties when you are shopping for an insurance policy.

Andrew Kryder, Esq., Chicago Personal Injury Lawyer, Explains a Duty to Defend vs. a Duty to Indemnify

Andrew Kryder is a personal injury lawyer at The Kryder Law Group, LLC Accident and Injury Lawyers. He explains complex legal terms in simple, clear language.

Andy tells us, “The insurance company has certain responsibilities and certain rights, just like you have certain responsibilities and certain rights to the insurance company.” Two of these responsibilities are part of the insurance company’s defense and indemnity obligation, or the duty to defend and the duty to indemnify.

When a duty to defend exists in an indemnification provision, it is an obligation of the insurance company to pay the insured’s defense costs in legal claims made against them. “Under an insurance contract [indemnity clause],” Andy explains, “an insurance company may be required to hire a lawyer to defend you in a court of law, if you’ve been accused of doing something negligent.” The insurer’s obligation is to pay for any legal fees incurred in defending you from such claims.

An Example of a Duty to Defend

Let’s say that you are involved in a car accident, and the other driver claims that it was your fault. In this case, your insurance company has a duty to defend you against certain claims and pay for any legal fees associated with legal liabilities, along with defending against such claims.

What Is a Duty to Indemnify?

Andy goes on to say, “The insurer’s duty to indemnify is about paying the money if you’re held responsible.” It is an obligation of the insurance company providing your liability insurance policy to pay any damages that may be owed as a result of a judgment against you.

An Example of Duty to Indemnify

Continuing with the example of a car accident, if you are found to be liable for the accident, your insurance company has a duty to pay for any damages owed by you in the settlement. Andy continues, “Duty to indemnify means paying the money if somebody finds you responsible.” This could include the cost of medical bills, lost wages, pain and suffering, and more.

Is the Duty to Defend Actually the Same Thing as the Duty to Indemnify?

No. Andy reminds us, “A lot of people will interchange the terms duty to defend and duty to indemnify, but they’re very, very different concepts.”

It is the insurer’s duty to defend you, to provide legal defense counsel to respond to allegations made against you, while the duty to indemnify is an obligation of the insurance company to actually pay any damages that may be owed as a result of those lawsuits.

Can an Insurer Refuse Their Duty to Defend or Their Duty to Indemnify?

Yes, an insurance company can refuse their indemnify or defense obligation, but they must provide a valid reason. Reasons for an indemnification refusal include evidence of illegal or fraudulent activity by the insured. Read your policy language carefully to understand when you may seek indemnification and understand any exclusions.

Have You Suffered an Injury in an Accident Caused by Someone Else’s Negligence?

The Kryder Law Group, LLC Accident and Injury Lawyers, is a law office with experienced attorneys who can help if you or a loved one has been injured due to someone else’s negligence. Call us today for a free consultation.