What is the 'duty to defend' in liability insurance?

The duty to defend is one of the most valuable parts of liability insurance. The insurer must provide and pay for legal defense — attorney fees, court costs, expert witnesses, investigation — for the insured against claims that potentially fall within coverage. Defense costs are typically outside the policy limit, meaning the policy limit remains available for settlement or judgment. The duty to defend is broader than the duty to indemnify: even groundless claims that ultimately have no merit must be defended if they fall within coverage. The duty extends to the entire claim if any part of it potentially involves a covered allegation. Defense costs often exceed the actual damages — particularly in professional liability cases — making the defense provision financially significant. The insurer chooses defense counsel (subject to certain restrictions); the insured cooperates with the defense. If the insurer wrongfully refuses to defend, it may face bad-faith claims with extra-contractual damages.