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Explaining an insurance company’s “duty to defend”

Insurance policy holders in Nevada and throughout the country should be aware of their rights and of the duties that insurers owe to them. There are three main duties, as follows:

  • The duty to defend
  • The duty to settle claims in good faith
  • The duty to indemnify, and to pay out on coverage claims

It’s critical for you to be aware of your rights, as it’s possible for an insurer to act in breach of one of their duties, an instance of insurance bad faith. If so, you may have the ability to seek financial redress through the legal system.

An insurer may be acting in bad faith by breaching any of their three duties, but this will focus on its duty to defend.

What does ‘duty to defend’ mean?

As an insured, it’s possible that at some point another party will file a claim against you. When this happens, your insurer must determine whether this claim is potentially covered by your policy. If this is true, the insurer has a duty to defend you against this claim.

An extremely important aspect of duty to defend is that the insurer may still have a duty to defend even if it ultimately turns out that this claim is not covered by the policy. As long as any part of the allegation or claim is potentially covered, the insurer must defend their client.

This means that the duty to defend is your broadest right as an insurance holder. There may be circumstances where a claim is filed but your insurer isn’t bound by the duty to indemnify, or pay on the claim on your behalf. However, the duty to define still binds them, and if they are in breach, you may be due damages.