Understanding The Duty To Defend Versus The Duty To Settle Versus The Duty To Indemnify
With third-party insurance claims, it isn’t always easy to understand an insurance company’s obligations to its policyholders. In California, an insurance company has several duties to its insured. Some of these distinct duties include the duty to defend, the duty to settle and the duty to indemnify. An insurance lawyer who has extensive experience with third-party claims can help you understand your options, interpret your policy and protect your rights as a policyholder.
At McLeod Law Group, skilled representation and precise attention to detail have been the cornerstone of our practice since 2003. Our founder, John McLeod, is a widely recognized San Diego insurance attorney. In over 30 years of practice, he has recovered billions of dollars for organizations and high net worth individuals. We understand the high stakes involved in complex commercial and high-value claims, and we are ready to put our record of success to work for you.
What Is An Insurance Company’s Duty To Defend?
The duty to defend is often the first and the most immediate obligation an insurance company owes to a policyholder in a third-party claim. In California, this duty is very broad. If a policy arguably covers any part of the claim, the insurer generally has a duty to defend the entire suit. This includes covering legal costs such as:
- Attorney fees
- Investigator fees
- Other litigation expenses
An insurer’s duty to defend is triggered when a lawsuit or claim is filed. If that lawsuit potentially falls under your coverage, the insurer has a duty to defend you. If your insurer attempts to deny this duty, we can help. Our San Diego insurance attorney understands complex policy language and bad faith litigation and will fight for your rights.
Does An Insurance Company Have A Duty To Settle A Case?
Under certain circumstances, an insurance company has a duty to settle a case. This duty is an implied obligation that arises from the insurer’s exclusive control over the defense and settlement of a claim against you. The insurer must act in good faith when deciding whether to settle a claim within the policy’s limits.
An insurer has a duty to settle if a reasonable and prudent insurer would accept the settlement offer. A failure to accept a reasonable offer could potentially constitute a breach of the implied covenant of good faith and fair dealing. If the insurer improperly refuses to settle, they may be held responsible for the entire judgment. This is true even for the part that goes beyond your policy’s stated limits. Protecting this right is vital for any company facing a San Diego insurance claim.
What Is An Insurance Company’s Duty To Indemnify?
The duty to indemnify requires an insurer to pay the judgment or settlement amount that you become legally obligated to pay to the third party. Unlike the duty to defend, which is triggered by the potential for coverage, the duty to indemnify is triggered only when there is an actual, covered loss.
How Can A Third-Party Insurance Lawyer Protect Your Rights And Help You Recover?
At McLeod Law Group, we exclusively represent policyholders, not the insurance companies. Insurance recovery scenarios, particularly those involving large or complex losses, require precise legal strategy. The insurance policy is a contract, and insurance companies often employ teams of lawyers to limit their payout. We work to level that playing field.
Our primary goal is to maximize your recovery. We do this by:
- Interpreting the policy: We thoroughly review your policy language to determine the full scope of the duties owed to you, including the duty to defend, the duty to settle and the duty to indemnify.
- Managing coverage disputes: If your insurer denies coverage or a defense, we assertively challenge their decision, often through declaratory relief actions.
- Fighting bad faith actions: If the insurer breaches its good faith duties, perhaps by failing to settle a reasonable claim, we hold them accountable for their actions and seek to recover the full judgment, including any amount above the policy limits.
The insurance company has lawyers looking out for its bottom line. We are here to make sure you have the representation you need to protect yours. Let us answer your questions about third-party claims and protect your rights as policyholders.
Consult A California Insurance Law Attorney
With a complex San Diego insurance claim, the stakes are often high. Our California insurance lawyer can help you understand your situation, clearly define the insurer’s obligations and develop sophisticated legal strategies designed to protect your future and financial stability.
Attorney John McLeod is available by appointment for initial consultations to provide guidance on your claim. To schedule an appointment, call our office at 619-433-6682 or send us an inquiry through our online form.