What is a duty to defend clause?

A duty to defend clause is a provision included in many types of insurance policies that obligates the insurance company to pay for legal expenses if its insured is sued for a covered loss. This clause generally applies to general liability policies, and businesses in Arkansas may benefit from this coverage. Generally, when an insured person or business is named in a lawsuit, the insurance company has a duty to investigate and determine whether the allegations are covered by the policy. If they are, the insurance company is then obligated to hire attorneys, pay for legal fees, and potential settlements or judgments against the insured. By having this coverage, the insured person or business is protected if a third-party files a lawsuit and prevented from having to pay for legal costs out of pocket. Duty to defend clauses are important because they help protect businesses from financial hardship if they are sued and allow them to fight the lawsuit without worrying about how they will pay for legal costs.

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What is a duty to defend clause?

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