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An insured driver who negligently causes an accident usually has at least one thing going for them: their insurance company will likely have a duty to hire a lawyer to defend them, and to pay for the damages they caused.

Most people know that their insurance will protect them against losses they may incur. But many may not understand that perhaps the most important aspect of their insurance policy is the liability section, with protects them from damages sought in third-party claims against them.

It’s Not Automatic: How Insurers Decide Whether They Have a Duty to Defend You

Most policies contain at least two liability-related promises made to you by your insurer:

  • An agreement to pay for your legal liability, up to the stated policy limits.
  • An agreement to hire a lawyer to defend you against a lawsuit, cover all associated legal fees and costs, and pay any monetary award entered against you by a third-party.

When a lawsuit, or “suit,” is filed against you, your insurer will determine whether or not the policy’s definition of suit is satisfied. Most liability policies contain a broad definition of suit, which usually includes a civil proceeding, arbitration, or administrative action, but not a criminal complaint, which triggers penalties such as jail time or fines instead of monetary damages.

The insurer will then decide whether the suit seeks damages for a covered occurrence that was not intended, but was instead the result of your negligence. Liability insurance carriers will typically not defend intentional acts. The type of damages sought will be reviewed to make sure that they are the type of damages covered under your policy.

Your insurer will also make sure that the claim arose during the effective period of the policy. For occurrence-based policies, coverage will be for suits arising from damages occurring during the policy period; for claims-made policies, coverage is only available for claims reported during the policy period.

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