In liability insurance, the insurer’s obligation to provide legal representation for the insured is the duty to defend.
This duty generally requires the insurer to appoint and pay for a legal defence when the insured faces a claim potentially covered by the policy. In many liability policies, it is triggered by the allegations in the complaint, not by the facts ultimately proved at trial.
The duty to defend is usually broader than the duty to indemnify. An insurer may have to defend a lawsuit even when it later turns out that the claim is excluded or that the insured owes no damages. By contrast, indemnity concerns paying covered losses for which the insured is legally liable.
Another common mix-up is reservation of rights. That is a notice preserving the insurer’s ability to dispute coverage while providing a defence; it is not the name of the defence obligation itself. Rules differ by jurisdiction, and the duty is especially prominent in United States and Canadian liability insurance.