What is the meaning of "duty to defend" in a liability insurance policy?

The concept of "duty to defend" in a liability insurance policy refers specifically to the insurer's responsibility to provide a legal defense for the insured against claims made in a lawsuit, regardless of the eventual outcome of that case. This duty is a fundamental aspect of liability insurance because it ensures that the insured is protected against the costs associated with defending themselves against legal action.

The insurer is obligated to defend the insured whenever there is a potential for coverage under the policy. This means that as long as the allegations in the lawsuit fall within the scope of the policy’s coverage, the insurer must appoint legal counsel and cover the defense costs. This requirement exists even if the allegations are ultimately found to be without merit, illustrating the broad nature of this duty. The rationale behind this duty is to provide the insured with peace of mind during legal challenges, ensuring they have the resources necessary to navigate potentially complex and costly legal disputes.

In context, the other options do not align with the definition of "duty to defend." For instance, while an insurer may have an obligation to settle or investigate claims, those actions stem from different responsibilities under the policy and do not capture the essence of the "duty to defend." The option suggesting the insurer has an option to deny coverage