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Duty to Defend: Insurance Contracts/Policies & Indemnification

Under Missouri law, insurance companies generally have two (2) responsibilities under an insurance policy: (1) a duty to defend and a (2) duty to indemnify. With the duty to defend, that means that an insurance company must hire legal counsel to defend the insured in a legal proceeding. With the duty to indemnify, that means that an insurance company must usually pay some/all of a judgment rendered against an insured. There are some instances in which an insurance company has a duty to defend but not a duty to indemnify.

An insurance company’s duty to defend only when there is a potential or possible liability to pay based on the facts at the outset of the case. In making this determination, Courts will compare the insurance policy language with the allegations in the petition/complaint from the underlying lawsuit. If the underlying petition/complaint gives rise to a claim potentially covered by the policy, the insurer has a duty to defend. Even beyond the petition, however, the insurer also has a duty to defend if facts that are known to the insurer, or that are reasonably apparent to the insurer, at the commencement of the suit establish a potential for coverage. Zipkin v. Freeman, 436 S.W.2d 753, 754 (Mo. 1968). An insurer is not relieved of its duty to defend merely because a plaintiff pleaded his/her claims inartfully. To summarize, then, an insurer has a duty to defend an insured based on facts (1) alleged in the petition, (2) that the insurer knows at the outset of the case, or (3) that are reasonably apparently to the insurer at the outset of the case. Id.; Tranwreck W., Inc. v. Burlington Ins. Co., 235 S.W.3d 33, 39 (Mo. Ct. App. 2007). If an insurance company does not honor its duty to defend or duty to indemnify when it supposed to do so, that can give rise to a breach of contract claim.

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