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Duty to Defend vs. Duty to Indemnify: Why Your Insurer Can Do One Without the Other
Why an insurer's decision to provide a defence isn't necessarily a promise to pay the eventual judgment.
Got a Letter from Your Insurer's Legal Department?
An insurer legal-department letter should be read for who counsel represents, what is requested and whether any coverage issue is raised.
A letter from an insurer’s legal department does not have one automatic meaning. It may relate to defending a third-party claim, investigating coverage, preserving recovery rights, requesting cooperation, negotiating settlement or responding to a complaint. Read the sender, client, policy and stated purpose before assuming either that defence coverage is confirmed or that it is in jeopardy. The letter may come from an insurer employee, in-house counsel, independent coverage counsel or a defence lawyer retained to represent an insured. Those roles are not interchangeable. Look for an express statement of the lawyer’s client. Defence counsel may represent the insured even though the insurer pays the bill and has contractual rights concerning the defence. Coverage counsel may represent only the insurer.
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