Opinion ID: 1963952
Heading Depth: 1
Heading Rank: 10

Heading: general principles regarding duty to defend and indemnify

Text: [5-8] Coverage under an insurance policy or contract is generally understood to consist of two separate and distinct obligations: the duty to defend any suit filed against the insured party and the duty to pay, on behalf of the insured, sums for which the insured shall become legally obligated to pay because of injury caused to a third party by acts of the insured. [6] An insurer's duty to defend is broader than its duty to indemnify. [7] Moreover, an insurer's duty to defend is usually a contractual duty, rather than one imposed by operation of law. [8] The nature of the duty to defend is defined by the insurance policy as a contract. [9] [9-12] An insurer's duty to defend an action against the insured must, in the first instance, be measured by the allegations of the petition against the insured. [10] In determining its duty to defend, an insurer must not only look to the petition or complaint filed against its insured, but must also investigate and ascertain the relevant facts from all available sources. [11] An insurer is obligated to defend if (1) the allegations of the complaint, if true, would obligate the insurer to indemnify, or (2) a reasonable investigation of the actual facts by the insurer would or does disclose facts that would obligate the insurer to indemnify. [12] An insurer, therefore, bears a duty to defend its insured whenever it ascertains facts which give rise to the potential of liability under the policy. [13] [13,14] But if, according to the facts alleged in a pleading and ascertained by an insurer, the insurer has no potential liability to its insured under the insurance agreement, then the insurer may properly refuse to defend its insured. [14] And although an insurer is obligated to defend all suits against the insured, even if groundless, false, or fraudulent, the insurer is not bound to defend a suit based on a claim outside the coverage of the policy. [15]