Glossary

Duty to indemnify

The insurer's obligation to pay a covered judgment or settlement against you, decided on the facts established rather than the complaint's allegations.

Also called: duty to pay, insurer's duty to indemnify, indemnity obligation

The duty to indemnify is the insurer's obligation to pay what you owe, a judgment or a settlement, when the liability falls within the policy. It sits beside the duty to defend but is narrower and arrives later.

The defense duty is judged on the allegations. The indemnity duty is judged on the facts as they turn out. Say a complaint alleges both negligence, which is covered, and intentional conduct, which is excluded (a hypothetical). The insurer defends the whole suit. If the verdict rests only on the intentional conduct, there may be nothing to indemnify, even though the insurer paid for years of defense. A settlement that allocates money to excluded claims can produce the same result.

Because the answer depends on facts not yet found, courts often will not rule on indemnity until the underlying case ends, though they may decide a pure question of policy interpretation sooner in a declaratory judgment action. A reservation of rights letter is the insurer's signal that it may later refuse to pay. Settling without the insurer's consent also puts indemnity at risk.

Do not confuse it with contractual indemnity, the promise in a hold harmless agreement. the insurer's duty to defend: what triggers it and when it ends compares the two duties, and coverage litigation and declaratory judgment actions: when you and your insurer end up in court covers how disputes over them are resolved.

Last reviewed October 10, 2026

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Related terms

Duty to defend A liability insurer's obligation to pay for your defense of a lawsuit that could potentially fall within coverage, which is broader than its duty to pay. Indemnity The principle that insurance restores your financial position after a loss, no better and no worse; also a contract promise to make good another's loss. Reservation of rights An insurer's written notice that it is handling a claim or defending a suit while keeping the right to deny coverage or recover costs later. Hold harmless agreement A contract clause in which one party agrees to take on another party's liability for specified claims, usually those arising from the first party's work. Defense costs The attorney fees, expert fees and other expenses of fighting a claim, which some policies pay on top of the limit and others deduct from it.

Related guides

Coverage litigation and declaratory judgment actions: when you and your insurer end up in court How insurers and policyholders sue over coverage, what a declaratory judgment action decides, why courts often wait, and what to do if your insurer files one. Indemnification and hold harmless clauses and your insurance What indemnify, defend and hold harmless promise, how broad, intermediate and limited clauses differ, and how TX, NY, FL and CA limit them. Independent counsel and Cumis counsel: when your insurer must pay for your own lawyer When an insurer defends under a reservation of rights, a conflict can entitle you to your own lawyer at its expense. How the rule works by state. Reservation of rights letters: what they mean and how to respond A reservation of rights letter is not a denial. What it says line by line, how it affects who controls your defense, and what to do in the first week. The insurer's duty to defend: what triggers it and when it ends A liability insurer must defend any suit that is potentially covered, even a groundless one. How the duty is triggered, what it costs you, and how it ends.