The duty to indemnify requires the insurer to pay covered damages the insured becomes legally obligated to pay. Unlike the defense obligation, which turns on potential coverage assessed from the pleadings, indemnity depends on the facts actually established.
Because it depends on the outcome, the duty to indemnify usually cannot be determined until the underlying case is resolved.
Alternative Names:
Indemnity Obligation
Why it Matters?
The gap between defending and indemnifying is where reservation of rights letters do their work. Defense counsel should understand which findings would establish or defeat indemnity, because verdict form structure and allocation among covered and uncovered claims can determine whether the carrier ultimately pays. Coverage counsel frequently seeks special interrogatories for exactly this reason.
Frequently Confused with
Related terms
Frequently asked questions
Can an insurer defend but refuse to indemnify?
When is the indemnity question decided?
