Posted on Car Accidents / Progressive Insurance | Duty To Defend v. Duty To Indemnify?

Page Updated 12/10/2021

Progressive Insurance | Duty To Defend v. Duty To Indemnify?


Whether you have underinsured coverage or customized coverage, it is important to know that in the event of a car accident, your insurance company may not defend you.

This is why it is important to read the insurance policy before purchasing it, as the insurance context may not work in your favor in certain claims.

For instance, things might be different when comparing commercial vehicles and personal ones.

If You Have Insurance Through Progressive, You May Need the Help of Ehline Law

Here, we will go over the duty to defend, the duty to indemnify, and an example to explain the rules of each.

Insurer’s Duty to Defend

The duty to defend gets triggered when a claim brought by a third party is against an insured to recover compensation for their loss. In such situations, an insurance company must appoint a defense counsel or pay for the legal fees of defending the policyholder against the claims. If you decide to select your own legal representative to protect your rights, the insurer must reimburse the attorney fees.

When Does the Duty to Defend Kick In?

Three steps help determine the duty to defend, and these are:

  • The insured’s policy must clearly mention the duty to defend against claims. Any ambiguous language in the policy will work in the favor of the insurance company.
  • The slightest possibility of a claim within the bounds of the policy against the insured succeeding triggers the duty to defend. According to the pleadings rule (expressed by the Supreme Court), the insurer must defend the policyholder if there is even a slight chance of winning the claim by the third party.
  • Lastly, an insurer must defend their policyholder depending on whether the claim is derivative.

Insurer’s Duty to Indemnify

There is a lot of confusion between the duty to defend and the duty to indemnify, and these are often linked with one another. However, that is not the case as the duty to indemnify comes at the end of a lawsuit when the liability gets established. In simple words, the duty to indemnify is the insurer’s duty to settle claims.

Unlike the duty to defend that comes out of the policy, the duty to indemnify arises after examining all the evidence and information throughout the case period.

Professional Liability Impacts the Duty to Indemnify

Compensation gets awarded based on all the evidence presented. However, the insurer will only pay the claims up to the limits of the professional liability policy. This means that if the third party wins the case, an insurer will only pay claims up to the limits mentioned in the insured’s policy.

Some jurisdictions argue that if there is no duty to defend, then there is no duty to indemnify, while other jurisdictions hold that even if the duty to defend exists, an insurer may not have the duty to indemnify.

What is the Indemnification Provision?

Indemnification provisions are all the clauses mentioned in a policy to protect a party against the legal actions of the other. When there are no indemnification provisions in a contract or policy, there may be a case of implied indemnification. However, if the indemnification provisions are in the policy, then the courts consider the policy provisions the final word and tackle the case accordingly.

In the case of a duty to defend, an indemnification provision where an insurer is responsible for defending will trigger the insurer’s duty to defend. In the case of a duty to indemnify, the indemnification provision protects the insurer by only processing claims up to the policy limits if the third party wins the case.

In certain states, like California, the Indemnitor must defend actions or proceedings brought against the indemnitee at their request in regards to the matters embraced by the indemnity. This may not be the case with other states, as the state law for defense obligations may vary.

Case Study: Matt Fisher Progressive Insurance Case

To help understand the duty to defend and the duty to indemnify, let’s go over a real-life car accident case involving two vehicles. This is a story about a legit wrongful death case involving a car accident, posted on Matt Fisher’s tumbler account.

A vehicle collided with another when a negligent driver rushed through their red light and into an oncoming car. Matt Fisher’s sister drove her vehicle as the traffic light turned green. However, another vehicle from the other side violated their red traffic light and smashed into the driver’s car. The accident immediately resulted in Matt Fisher’s sister’s death, leading to what many would say is an “open-and-shut” case.

The family pursued the negligent driver’s insurer, who settled the claims in the deceased victim’s estate. However, the compensation barely amounted to anything since the negligent driver did not have sufficient coverage. Luckily, the victim had underinsured coverage with Progressive Insurance.

When it was time for the underinsured coverage to kick in, Progressive lawyers took the stage to defend the negligent driver instead of their own policyholder to get out of paying money towards the victim’s estate. In the end, the jury found that the other driver was guilty and negligent, which raises questions about the defense obligation of Progressive Insurance.

The case is a wrongful death case due to a car accident, and when Matt Fisher’s family pursued the other driver’s insurance company, the duty to defend kicked in. The negligent party’s insurer realized that the other party had a chance of winning, the claim was not of derivative nature, and that the insured’s policy mentioned the duty to defend.

All these three rules created the duty to defend for the negligent party’s insurer to pay the settlement up to the policy limits into the victim’s estate. The evidence presented in court was sufficient for the jury to decide that the other driver was negligent, resulting in compensation. The financial obligation at the end of the lawsuit created the duty to indemnify, which the negligent party’s insurance company complied with.

The principles behind duty to defend and duty to indemnify and the state laws can often get confusing. If you got into a car accident, contact us at (213) 596-9642 and get a free consultation with our underinsured motorist attorney legal experts today!

Ehline Law Firm - Personal Injury Attorneys, APLC
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