Defense Of Suit Against Insured

What Does Defense Of Suit Against Insured Mean?

“Defense of suit against insured” refers to a provision in liability insurance policies that guarantees the insurer will cover the costs of a legal defense for the insured, even if the lawsuit lacks a solid legal basis. Defense cost coverage typically includes attorney fees and the preparation of the defense, such as hiring experts, conducting investigations, and covering court costs. This kind of defense coverage is built into most general liability insurance policies that businesses carry to protect against third-party claims.

Insuranceopedia Explains Defense Of Suit Against Insured

In general, liability insurance contracts indicate that the insurer has to indemnify and defend. In simpler terms, indemnification refers to covering damages when a judgment is made against the insured, while defense refers to paying for defense costs. When a third party files a lawsuit against the insured, this triggers the insurer’s duty to defend. However, if the insurer determines that the liability in the lawsuit is not covered by the policy, they may refuse to provide a defense. In such cases, the policyholder would need to cover defense costs out of pocket, which can be very expensive.

This is where a “defense of suit against insured” clause benefits the policyholder. It strengthens the insurer’s duty to defend across a broader range of lawsuits. Even if the liability isn’t covered by the policy or the lawsuit lacks merit, the insurer would still be responsible for covering defense costs. For businesses and professionals who face a higher risk of being sued, professional liability insurance usually spells out this duty to defend in clear terms, along with any exclusions.