Inside my last post I described " reservation of rights letters " and whatever they mean. You could be wondering why your insurer will agree to cover an attorney to defend you inside a lawsuit but won‘t agree to pay out any judgment against you that could come at the conclusion from the lawsuit.
A liability insurer has two duties : the " duty to defend " and " the duty to indemnify. " The duty to defend is that the duty to pay out an attorney to defend you inside a lawsuit that‘s brought against you. The duty to indemnify is that the duty to pay out a judgment against you.
Whether the insurer includes a duty to defend is based upon the allegations from the complaint the plaintiff files against you in court. The insurer reads the complaint and determines whether, whether everything (or anything ) inside the complaint is true, the reality stated inside the complaint could possibly be covered from the insurance policy. In that case, the insurer needs to defend you.
For instance, let us say you have an insurance policy that provides insurance only in case a person is hurt by an apple falling from the apple tree. Someone sues you and says inside the complaint that they are injured when they had been hit by an apple that fell from the apple tree. Your insurance company will need to defend you in which lawsuit. it does not have to make a difference the person is lying and was actually hit using a falling acorn--your insurer still must defend you.
Inside a later post I will be able to discuss the insurer's duty to indemnify, and why an insure may need a duty to defend although not to indemnify.
A liability insurer has two duties : the " duty to defend " and " the duty to indemnify. " The duty to defend is that the duty to pay out an attorney to defend you inside a lawsuit that‘s brought against you. The duty to indemnify is that the duty to pay out a judgment against you.
Whether the insurer includes a duty to defend is based upon the allegations from the complaint the plaintiff files against you in court. The insurer reads the complaint and determines whether, whether everything (or anything ) inside the complaint is true, the reality stated inside the complaint could possibly be covered from the insurance policy. In that case, the insurer needs to defend you.
For instance, let us say you have an insurance policy that provides insurance only in case a person is hurt by an apple falling from the apple tree. Someone sues you and says inside the complaint that they are injured when they had been hit by an apple that fell from the apple tree. Your insurance company will need to defend you in which lawsuit. it does not have to make a difference the person is lying and was actually hit using a falling acorn--your insurer still must defend you.
Inside a later post I will be able to discuss the insurer's duty to indemnify, and why an insure may need a duty to defend although not to indemnify.