Getting confused by legal jargon and wish you could just ask a lawyer to explain it to you? We’ve done just that in this legal glossary series. This time, Chicago personal injury lawyer, Andrew Kryder, explains the difference between a duty to defend clause and an indemnification provision in an insurance policy.
Duty to Defend vs. Duty to Indemnify
When you purchase an insurance policy, it is important to understand the difference between the insurance company’s duty to defend you and a duty to indemnify. A duty to defend means the insurance company has a legal obligation to hire lawyers for defending claims against you, the insured. This ensures that you have adequate representation in legal proceedings.
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 liability includes the cost of medical bills, lost wages, pain and suffering, and more for someone injured by the insured.
It is important to know both your policy limits and duties when you are shopping for an insurance policy.
Andrew Kryder, Chicago Personal Injury Lawyer, Explains a Duty to Defend vs. a Duty to Indemnify
Andrew Kryder is a personal injury lawyer with the law firm The Kryder Law Group, LLC Accident and Injury Lawyers. He explains complex legal terms in simplified, easy-to-understand 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 obligation, or the duty to defend and the duty to indemnify.
What Is a Duty to Defend?
When a duty to defend exists, it is an obligation of the insurance company to pay the insured’s own defense costs in legal claims made against you, the insured. “Under an insurance contract,” 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 will 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 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 to defend or indemnify, but they must provide a valid reason. Reasons for refusal include evidence of illegal or fraudulent activity by the insured. Read your policy language carefully to understand any exclusions.
Have You Suffered an Injury in an Accident Caused by Someone Else’s Negligence?
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