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What is the duty to defend?

Insurance companies are under an affirmative obligation to defend their insured against potential claims. But it is in the interest of the insurance company to accept insurance premiums and then deny or drop coverage when a claim arises against the insured. Therefore, there is a body of law "bad faith insurance" that is designed to prevent wrongful denial of the duty to defend. This post will go over the duty to defend and bad faith insurance claims.

A standard clause in every insurance policy is the duty to defend. The insurance company agrees to represent its insured if they are sued. For example, if you own homeowner's insurance and someone is injured on your property, and they sue, your insurance company is under an obligation to defend you. That means, the insurance company hires a lawyer and funds your legal defense. It also means that the insurance company pays for your judgment if you lose or settlement.

But, it is in the insurer's interest to deny coverage. In these situations, if the denial was wrongful, your insurance company could be liable for bad faith insurance coverage. Insurers can only deny coverage if there have a good reason, i.e. you missed your last few premium payments. Absent such proof, your insurer could be subjected to mandatory damages. Many states mandate that insurance company pay three-times the policy to cover the insured's liability, pay compensation to the insured for their denied coverage and to punish the insurance company.

Did your insurer deny your coverage or claim? If so, call an attorney as soon as possible. Insurance bad faith is a powerful tool to use against your insurance company. Bad faith insurance, if substantiated, opens your insurer to substantial damages. A lawyer can go over the issues in bad faith insurance, to help you determine the best way to get your coverage approved.

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